Victor Chengs Case Interview Framework Flashcards
Mergers & Acquisitions “FIT” Framework
Use this frame work when Company A is looking to acquire or merge with Company B and the companies are different. (Framework determines if company is a good fit. If Company A & B are nearly identical use capacity expansion framework)
FIT: use core business situation framework Run for Company A, B and A + B
Customers. Products. Company. Competition Company A Company B Company A + B
Identify synergy in new company
Identify opportunities for one-way or mutual
Classic good fit: company a has huge sales force, but lousy products, Company B has minimal sales force, but killer products
Hint: every time there is a synergy that is one vote in the good fit column
Capacity Change Framework
ABC company is considering adding capacity, reducing capacity or acquiring a direct competitor.
DEMAND: How Sustainable: growth in overall market, growth in firms market share Segment Sources of Demand -each segments share of total demand -trends in demand segment *focus on largest sources of demand
SUPPLY:
Determine industry supply
Segment industry supply by market/market segment
Identify effect of increases in supply on prices
Possible benefits
Intro tech innovations with capacity expansion
Increase productivity —> lower marginal cost
COST OF EXPANSION
Real costs (can firm afford it)
Opportunity Cost: payback period and break even
Alternatives: outsource, leas, sub-contract
Business Situation Framework
Customer:
