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H I G H B R I D G E 2
 EXAMPLE CASES FROM
THE HIGH BRIDGE CASE LIBRARY (40+ CASES)

CASE 1

Kai Drinks
CASE 2

Dubai Power

3
 EXAMPLE CASES FROM
THE HIGH BRIDGE CASE LIBRARY (40+ CASES)

CASE 1

Kai Drinks
CASE 2

Dubai Power

4
Kai Drinks

Key data
Industry Beverages
Level of
Easy
difficulty
Type M&A
Synergies
Business concepts
Productivity

H I G H B R I D G E 5
Kai Drinks
Case Abstract (for Interviewer only)

Summary of Case Topics Summary of Case Questions

• Kai Drinks is a case about a soft drinks 1) Structuring question: Should your client Kai Drinks acquire its biggest
producer that is thinking of acquiring its competitor, Abelardo Inc.?
largest competitor.
2) Brainstorming Question: What are the possible synergies for this
• The candidate will perform a full analysis acquisition by Kai Drinks?
in order to make a recommendation about
this operation. 3) Graph Question: What insights can you draw from that table?

4) Math question: What is the potential cost reduction on salesforce for

Kai Drinks using the best practices of both companies after the
acquisition?

5) Brainstorming Question: What are the potential risks of this

acquisition?

H I G H B R I D G E 6
Kai Drinks

Case question Possible clarification questions i

• Your client is a soft drink company Category Question Answer
called Kai Drinks, the market What Does the client have previous No
leader in the Philippines, with exactly experience with M&A?
42% of the market share. happened?
• Kai Drinks’ two biggest Goal What is the aim of acquiring To increase its market share and profits
competitors, Abelardo Inc. and the competitor? by capturing synergies.
Nox, have 28% and 20% of the Goal Would the client consider any Yes, the client is open to other
market share. other alternatives? acquisition targets.
• Kai Drinks’ owners are thinking Business Which markets does the Only in the Philippines
about buying Abelardo Inc. and model company operate in?
have hired you to help make the
decision. Business I assume the client is a typical Correct. They sell to wholesalers and
• Should your client Kai Drinks model beverage factory, they buy retailers all over the Philippines.
acquire its biggest competitor, ingredients, mix and bottle,
and sell to distributors. Is that
Abelardo Inc.?
accurate?
Business How does the client segment We don’t information yet
model their sales?

H I G H B R I D G E 7
Kai Drinks: suggested structure
The candidate should: Profits Customers
1. Approach this decision with a mixed framework Financial Health
(Qualitative, Quantitative and Risks) Debt level Channels
2. Mention synergies (revenue and costs) examples
and integration costs Revenue Other
3. Bring up some alternatives Kai Drinks Synergies
Costs Supplies
Business Sense
M&A Experience Factory
Abelardo Inc.
Qualitative aspects Cultural fit Management

Other Other

Standalone

Valuation Synergies
Economics
Should Kai Price Integration Costs
Drinks
Due Diligence
acquire Integration issues Customers
Abelardo Inc?
Risks Reactions Competitors

Regulators

Trends Less soft drink consumption

Other targets

Alternatives Partial acquisition

Partnership
H I G H B R I D G E 8
Kai Drinks

Brainstorming question

• What are the possible synergies for this acquisition by Kai Drinks?

Suggested structure

Recommended structure for possible Synergies:

Revenue synergies Cost synergies
• Price synergies • Variable costs
– Higher market power can mean the combined companies can increase – Higher negotiation power with suppliers and better prices/payment terms
prices to wholesalers and retailers (bottles, caps, syrup, sugar, preservatives etc.)
• Volume synergies • Fixed expenses
– Selling to each other’s customers/channels (increase in distribution – Consolidate production and use more of the production capacity to dilute
footprint) fixed costs (and sell unused assets)
– More powerful brand can attract new customers – Consolidate management & sales teams, and also dilute costs (and cut
down on management/sales positions)
• Others
– Consolidate distribution (warehouses, trucks etc.)
– R&D exchanges can help create new flavors
– Combine Marketing budget and achieve same results with less investment
– Marketing know-how can be exchanged to improve campaigns
(only one institutional branding campaign instead of two)
– Higher negotiation power with the media for Marketing campaigns

H I G H B R I D G E 9
Kai Drinks

Chart interpretation question and guide

• Provide Exhibit 1 and ask: “What insights can you draw from that table?”

H I G H B R I D G E 10
Kai Drinks: Exhibit 1

What insights can you draw from this table?

Abelardo
Kai Drinks Inc. Number of individual retailers/wholesalers

Cost per salesperson per $35,000 $30,000 Total in the Philippines 100,000
year (US dollar)

Sell only Kai Drinks 37,000

Salesforce efficiency 140 125
(wholesalers/retailers per
salesperson)
Sell only Abelardo Inc. 20,000

Sell both Kai Drinks & Abelardo Inc. 40,000

Don’t sell either 3,000

H I G H B R I D G E 11
Kai Drinks

Suggested interpretation Intermediate conclusion

• There will be revenue and costs synergies in sales • There are relevant synergies
that support the acquisition,
Revenue
but that is not enough to
• We could sell Kai Drinks to up to 20k more customers (that sell only justify a recommendation yet.
Abelardo Inc.) and Abelardo Inc. to up to 37k more (that sell only Kai
Drinks).
Costs
• We would need fewer salespeople with the combined companies to
cover the 40k wholesalers/retailers that sell both brands (one
salesperson could sell both brands to the same client)
The next step would be to evaluate the effect of the synergies on the
profits.

H I G H B R I D G E 12
Kai Drinks

Math question and guide

Ask the candidate:

• What is the potential cost reduction on salesforce for Kai Drinks using the best practices of both companies
after the acquisition?
• Assume that it’s only possible to keep the salaries and the productivity of one of both companies.
• Assume that 100% of the distribution channels from each other will be captured.

H I G H B R I D G E 13
Kai Drinks

Suggested answer
1. Efficiency Content & Formula Kai Drinks Abelardo Inc.
Cost per salesperson $35,000 $30,000
Salesforce efficiency
140 125
(wholesalers/retailers per salesperson)
$35,000 $500 ∙ 70 $30,000 $30 ∙ 1,000
Cost per customer per salesperson = = $250 = = $240
140 2 ∙ 70 125 125

2. Potential Content & Formula Kai Drinks Abelardo Inc. Kai Drinks & Abelardo Inc.1
cost reduction Wholesalers/retailers to serve 77,000 60,000 97,000
Salesforce efficiency
140 125 125
(wholesalers/retailers per salesperson)
77,000 1,100 ∙ 70 60,000 1,000 ∙ 60 97,000 1,000 ∙ 97
# salespeople = = 550 = = 480 = = 776
140 2 ∙ 70 125 125 125 125
Annual costs 550 ∙ $35,000 = $19,250,000 480 ∙ $30,000 = $14,400,000 776 ∙ $30,000 = $23,280,000
Cost reduction $19,250,000 + $14,400,000 − $23,280,000 = $10,370,000
So-What
• The potential cost reduction on saleforce after the acquisition is ~$10.5M/year
– We will have the average productivity of Abelardo Inc. of 125 customers/salesperson for everyone
– We will have the average salary of Abelardo Inc. of 30k/salesperson for everyone
– From 1,030 employees in both companies, now only 776 will be needed, so we will cut 254 sales job positions
1 Using the more effective salesforce (which is the one from Abelardo Inc.)
H I G H B R I D G E 14
Kai Drinks

Brainstorming question

• What are the potential risks of this acquisition?

Suggested structure

Legal Customers Competitors Culture Systems

• Anti-trust regulators • Customers might • Competitors might • Big differences in • IT systems might be
might stop the deal see one or other engage in M&A as culture (e.g. conflicting and not
to avoid a very high brand negatively well or change decision-making possible to
market and stop buying/buy offerings process, hierarchy, combine, creating
concentration less of our products aggressively (e.g. level of formality information
(together the two pricing, promotion), etc) can create fragmentation and
companies would which can hurt our attrition among higher risk of
control 70% of the revenues employees failure
market)

H I G H B R I D G E 15
Kai Drinks

Recommendation and guide

• The candidate is not ready to answer the main question of the case “Should your client Kai Drinks acquire its biggest competitor, Abelardo
Inc.?
• Ask the candidate: “Based on the analysis so far, should your client Kai Drinks acquire its biggest competitor, Abelardo Inc?”

Recommendation
• Question – Based on the analysis so far, should your client Kai Drinks acquire its biggest competitor, Abelardo Inc.?
• Recommendation – Based on the available data, there’s value from synergies in acquiring Abelardo Inc., however, we cannot say for sure you
should do that yet. There are two main arguments favoring the acquisition:
– Argument 1: we have identified several potential revenue and cost synergies between the two companies, which could lead to higher
profits after M&A.
– Argument 2: after analyzing the synergies on the distribution to wholesalers and retailers, we learned that the synergies in salesforce can
lead to $10.5M cost reduction.
• Risks:
– Cannibalization risks
– Integration risks
– It might be difficult to lay-off Kai Drinks salespeople/cut their salaries (labor union, severance pay, negative image, etc.)
• Next steps:
– Before fully recommending the merger, Kai Drinks should estimate the other big synergies in production and distribution and conduct risk
assessment on the regulatory and competitive environment.
H I G H B R I D G E 16
 EXAMPLE CASES FROM
THE HIGH BRIDGE CASE LIBRARY (40+ CASES)

CASE 1

Kai Drinks
CASE 2

Dubai Power

17
Dubai Power

Key data
Industry Energy
Level of
Medium
difficulty
Type Decision
Opportunity assessment
Business concepts
Payback

H I G H B R I D G E 18
Case Abstract
Summary of Case Topics Summary of Case Questions
• Dubai Power is a case about 1. Brainstorming Question: What types of renewable energy can
finding the appropriate renewable you think of?”
energy source for the Dubai
2. Structuring question: “What renewable energy source should
Government to power its business
Dubai choose to power the district?”
district.
3. Graph question: What type of renewable energy would you
• The candidate needs to evaluate
recommend to analyze further?”
the viability of various options
first, and then analyze the 4. Math question: “How many years does it take for Solar PV and
financials of short-listed options. CSP to return the Invested Capital?”

H I G H B R I D G E 19
Dubai Power
Case question Possible clarification questions
• Your client is the Urban Development Type Question Answer
Department of the Dubai Government
(United Arab Emirates). What Exactly Why have they decided to pursue For long-term sustainability, as other
Happened this goal? districts might also follow, and for
• The Department has created an ambitious showcasing Dubai to the world as pioneer.
plan to power one of its business districts
exclusively through renewable energy.
Do they have any options in We’ll talk about it later.
Goal
• The plan has received widespread media mind? Solar, wind?
attention and praise, and other countries
Goal Are there any considerations/ Ensuring that 100% of the energy produced
might follow suit. is renewable, while having the fastest
constraints?
payback possible.
• The Department has consulted you to
recommend sources of clean energy Bear in mind that Dubai is a coastal city in
generation. a desertic region.

• What renewable energy source should What is the expected energy The District is expected to consume 18,000
Dubai choose to power the district? Goal demand of the district? GWh per year.

Business Will the Government be the sole Yes, 100% of energy supplied is from the
Model energy provider? How does it public company belonging to the UAE
work? Government. The price will be a fixed rate
of 0.10 USD per kWh.

H I G H B R I D G E 20
Dubai Power
Brainstorming Question Suggested answer Structuring Question
After the clarification questions, A strong candidate should mention as After the quick brainstorming, tell
when the candidate asks for time, many as possible from the list bellow: the candidate:
interrupt and ask:
1. Solar energy - Solar Photovoltaic (PV) “Now let’s please address the
“What types of renewable or Concentrated Solar Power (CSP, client’s main question:
energy can you think of?“ that will be covered further in this
case What renewable energy source
should Dubai choose to power the
2. Wind energy district?”
3. Hydro energy
4. Tidal energy (wave)
5. Geothermal energy
6. Biomass energy (e.g., waste, wood)

H I G H B R I D G E 21
Dubai Power: Suggested structure
The candidate should: Solar Wind Hydro Tidal Geothermal Biomass
1. Apply some kind of decision framework (including
qualitative, quantitative & risk aspects)
2. Verbally state that they would compare all the options
according to the dimensions
3. Acknowledge that not all types are feasible for the region

Verbal comments examples

Business Sense • “We can apply business sense to shortlist the most attractive options.”
• “First, I would screen the different options for feasibility in the region. If there’s little wind, for example,
wind power is not a good choice.”
Feasibility in the region
• “Second, I would look at the reliability of the source. Solar is probably very reliable as the region is very
sunny. But unsure about Hydroelectric sources reliability in the region, since it‘s a desert. The possibility to
Reliability & storage
store the energy (e.g., batteries) can balance out intermittent production.”
• “Third, I would look at safety levels, including potential environmental hazard, to de-prioritize dangerous
Safety level
options upfront.”
Which • “We already saw that price charged per kWh will be the same for each option, so I will focus on the analysis
Financial (Payback)
renewable? of the investments & investors (public vs private) and fixed/variable costs of each option.”
Investment

Annual Profits

• “Assuming we chose the most reliable and safe energy sources to analyze, I would still want to take a look
Risks
at any other risks, such as accidents & economic risks –like demand being lower than forecasted.

Accidents

Economic risks
H I G H B R I D G E 22
Dubai Power
Exhibit Possible clarification needed after showing Exhibit A
• The next step is to provide Exhibit A Type Question Answer
and tell the candidate
Definition What is the difference You can share exhibit B with the
• “What type of renewable energy between Solar PV and Solar candidate
would you recommend to analyze concentrated?
further?”

• Allow the candidate time to read and Definition What is the difference Onshore is on land and offshore is
understand the table between wind onshore and installed in water.
wind offshore?

Land Do we have any data on the Yes, Dubai is known for its desert,
availability land availability for and there’s plenty of space to install
installation? the energy plants

H I G H B R I D G E 23
Dubai Power: Exhibit A
Average cost
Source (USD/MWh) Energy generator driver Other important factors to be considered
Solar Photovoltaic 35 - 55 • Sunlight availability • Panel maintenance
(PV) • Space availability for implementation

Solar Concentrated 20 - 120 • Sunlight availability • Similar to Solar PV but output is less variable
Power (CSP)

Wind offshore 80 - 120 • Stability and strength of wind • Based in water, so it has foundation complexity

Wind onshore 50 - 70 • Stability and strength of wind • Causes visual and noise pollution
• Requires extensive areas

Hydro-electric 80 - 100 • Availability of rivers and areas that • Causes environmental impact from flooding and
can be flooded changing water flows

Tidal 200 • Waves (insufficient in UAE) • Causes visual and noise pollution

Geothermal 50 - 70 • Thermal energy from the Earth’s • It’s considered renewable because the Earth’s
crust (insufficient in UAE) interior has an immense amount of energy

Biomass 80 - 150 • Wood, grass, organic waste, etc • Wood can release more CO2 than coal
• Plants need fertile soil to grow fast

H I G H B R I D G E 24
Dubai Power: Exhibit B
Types of renewable energy generation
Solar PV (Photovoltaic) Concentrated Solar Power (CSP)

• Converts sunlight into electricity via thin mono- • Converts thermal energy into electricity by
crystalline silicon films (solar panels). concentrating solar rays using architecture and mirrors.

• During cloudy days or night-time, PV cannot function • CSP can function in cloudy or sub-optimal conditions
due to the absence of sufficient sunlight. because there is still sufficient thermal energy.

H I G H B R I D G E 25
Dubai Power: Example analysis
• Both PV and CSP can be attractive:
– (1) Dubai has a lot of sun and the cost of those types of energy could be on the lower range, making them the
Recommendation cheapest options
– (2) Solar doesn’t cause considerable environment damage

• First of all, the energy option should be financially attractive. PV and CSP have potentially the lowest cost at 35
Cost and 20 USD/MWh, respectively
• Given that the price to be charged is 0.10 USD/KWh, the price needs to be below 100 USD/MWh. CSP can cost up
to 120 USD/MWh, so we need to look closer.

Energy generator driver • Second, it’s necessary to think about what generation drivers are available in Dubai.
• We can analyze the most relevant options for Dubai
Solar availability
– Dubai is very sunny, so we can assume that there’s excellent availability for solar power.
Which – It’s possible that Dubai is not windy enough to power the business district economically. We’d have to check
option? Wind availability
that.

Water availability – Given the desert climate, it’s possible to say that Dubai does not have a lot of hydroelectric potential.
– Biomass requires fast plant/tree growth, which is difficult in a desert. Waste generated by the population
Dust generation capacity could be a source

Other important factors • Finally, we need to look to other factors that need to be considered, such as type of land availability and possible
environment damage.
Type of available land • Dubai is known for its deserts, so it seems there’s a lot of available land to install solar panels
• The last thing would be to analyze if there’s any option that fits the other categories and doesn’t cause
Environment damage considerable environmental damage, so hydroelectric and biomass should be avoided if possible.

H I G H B R I D G E 26
Dubai Power: Guide for interviewer
Math Question
• Tell them that Dubai has received two promising proposals from solar powerplant suppliers.
• Present Exhibit C.
• Ask the candidate: “How many years does it take for Solar PV and CSP to return the Invested Capital?”

H I G H B R I D G E 27
Dubai Power: Exhibit C
Solar power suppliers’ propositions
Unit PV CSP

Time horizon to depreciate years 20

Capacity factor* % 25% 50%

CAPEX to install $/W 0.65 3

CAPEX to store energy $/W 0.35 0**

* Capacity factor: how much energy is produced by a plant compared with its maximum output (plant capacity)
** Storage for CSP is not needed and any CAPEX is included in CAPEX production

H I G H B R I D G E 28
Dubai Power: Guide for interviewer
Math Question: Calculating Payback Intermediate conclusion
• Before starting the math plan, a strong candidate will notice that we don’t have “Based on the given data, we only have
any data on the OPEX. available information regarding the CAPEX.
• When asked, provide the numbers below verbally.
However, we must consider the variable and
KPI Unit Solar PV CSP fixed costs in order to calculate the profits.

OPEX cents/kWh 5 2 Do we have that data?”

• If the candidate asks, OPEX includes both variable and diluted fixed costs
(considering maximum capacity utilization)

• If the candidate hasn’t clarified yet, please provide the energy demand (18,000
GWh per year) and price (0.10 USD per kWh).

• The candidate should produce their math plan.

• If they need help with units:

– 1 kW = 1,000 W (thousand)

– 1 MW = 1,000,000 W (million)

– 1 GW = 1,000,000,000 W (billion)

H I G H B R I D G E 29
Dubai Power: Suggested Math Plan
Math Question: Calculating Payback
Total CAPEX (Investment) The candidate must pay attention:
Payback Calculation information was given in different units
Profit

1. Capacity needed Capacity needed [GW] = Energy demand [GWh/year] / Annual running hours [h] / Capacity factor [%]

2. CAPEX Total CAPEX [USD] = Capacity needed [GW] * CAPEX per unit [USD/W] * Conversion w to GW

3. OPEX OPEX [USD/year] = Energy demand [GWh/year] * OPEX [USD/kWh] * Conversion kW to GW

4. Revenue Revenue [USD/year] = Energy demand [GWh/year] * Price[USD/kWh] * Conversion kW to GW

5. Profit Profits [USD/year] = Revenue [USD/year] - OPEX [USD/year]

6. Payback Payback [years] = Total CAPEX [USD]/ Profit [USD/year]

H I G H B R I D G E 30
Dubai Power: Calculations

Payback Calculation
Capacity needed [GW] = Energy demand [GWh/year] / Annual running hours [h] / Capacity factor [%]

1. Capacity estimation PV CSP

Energy demand [GWh/year] 18,000
Provided data
2. CAPEX Annual running hours [h] 9,000*
Capacity needed (if 100%) 2 GW
Calculation
3. OPEX Capacity factor 25% 50%
Capacity needed (GW) 8 4
4. Revenue
Total CAPEX [USD] = Capacity [GW] * CAPEX per unit [USD/W] * Conversion w to GW

5. Contribution Margin PV CSP

Capacity (GW) 8 4 Previously calculated
6 Payback CAPEX per unit [USD/W] 1 3 Provided data
Conversion w to GW x 1 billion x 1 billion Calculation
Total CAPEX (USD) 8 billion 12 billion

* 24 hours of usage during 365 working days of a year = 8,760 hours = ~9,000 hours

H I G H B R I D G E 31
Dubai Power: Calculations

Payback Calculation
OPEX [USD/year] = Energy demand [GWh/year] * OPEX [USD/kWh] * Conversion kW to GW
1. Capacity estimation Type PV CSP
Energy demand 18,000 Provided data
2. CAPEX [GWh/year]
OPEX [USD/kWh] 0.05 0.02 Calculation
3. OPEX Conversion kW to GW x 1 million x 1 million
OPEX [USD/year] 900 million 360 million
4. Revenue
Revenue [USD/year] = Energy demand [GWh/year] * Price [USD/kWh] * Conversion kW to GW

Type PV CSP
5. Contribution Margin
Energy demand [GWh/year] 18,000 Provided data
Price (USD/kWh) 0.10
6 Payback
Conversion kW to GW x 1 million Calculation

Revenue (USD/year) 1.8 billion

H I G H B R I D G E 32
Dubai Power: Calculations

Payback Calculation
Profits [USD/year] = Revenue [USD/year] - OPEX [USD/year]
1. Capacity estimation Type PV CSP
Revenue [USD/year] 1.8 billion Previously
2. CAPEX OPEX [USD /year] 900 million 360 million calculated

Profits [USD/year] 900 million 1,440 million Calculation

3. OPEX

4. Revenue
Payback [years] = Total CAPEX [USD]/ Profit [USD/year]
5. Contribution Margin Type PV CSP
CAPEX (USD) 8 billion 12 billion Previously
6 Payback Profits (USD/year) 900 million 1,440 million calculated

Payback (years) 8.9 8.3 Calculation

H I G H B R I D G E 33
Dubai Power

Math Question: Calculating Payback

• A strong candidate will provide the “so-whats” of the analysis:
1. CSP has the lowest payback
• CSP has the highest CAPEX, but its profits compensate for it
• In the time horizon of 20 years CSP will yield more profits

H I G H B R I D G E 34
Dubai Power

Final recommendation
Question – What renewable energy source should Dubai choose to power the district?
Recommendation – Dubai should select the Solar CSP solution
• Argument 1 – CSP has the lowest payback
• Argument 2 – Dubai is an adequate location for solar power, because of its high amount of sunlight
Risks:
• Severe sandstorms can damage solar energy production and impact OPEX costs.
• However, this is a problem for both Solar PV and CSP, so this does not change the recommendation but
suggests a need for mitigating steps.
Next steps:
• Explore financials of alternative renewable energy sources and the combination of multiple ones
• Invest in R&D or collaborate with other organizations to reduce costs of technology and CAPEX

H I G H B R I D G E 35
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H I G H B R I D G E 36
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