Basil & Co: Is This Target Growing, or Just Floating?
Consulting
hard50 min0 submissionsGoogle
Scenario
A private equity client is considering acquiring a quick service restaurants business in India at 8x EBITDA.
The target turns over ₹515 Cr, growing at 30% a year, at a 19% EBITDA margin. The underlying market is growing at about 8%.
Its largest customer is 39% of revenue; the top five are 72%. The average remaining contract term is 1 year.
The vendor's model assumes growth continues at the current rate for five years. Your client has four weeks and wants to know whether to proceed.
Supporting data
deal
- implied ev cr
- 782.8
- ev ebitda multiple
- 8
market
- market growth pct
- 8
target
- ebitda cr
- 97.8
- revenue cr
- 515
- ebitda margin pct
- 19
- revenue growth pct
- 30
concentration
- top 5 customers pct
- 72
- largest customer pct
- 39
- average remaining contract years
- 1
Your task
Advise the deal team. Your answer should provide:
- Analysis — decompose the growth. How much is market, how much is share gain, and what does the multiple assume?
- Risks — what could make this a bad deal at any price.
- Recommendation — proceed, reprice, or walk, and the one diligence question you would answer first.
State any assumptions you make.
Ready to move forward? Up next: Bluepeak Logistics Cannot Meet DemandNext question
How you'll be graded
80 points, 60% to pass.
- recommendation15
- market analysis25
- risk assessment20
- financial analysis20
Hint
Reveal suggested structure
Growth = market growth + share change. Test whether share gain is repeatable, then stress the multiple against concentration and contract cover.