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Stretch: Should Hanbit Foods acquire Dasom Kit, a meal kit maker?
You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.
Case timer
00:00
1. Read the prompt aloud
Read it slowly, then pause. Let the candidate ask questions before they structure.
Hanbit Foods, a Korean maker of sauces and ready meals, has been offered Dasom Kit, a meal kit maker, for KRW 90 billion. The data pack shows the numbers. Write a one-page recommendation: should Hanbit buy, and at what price?
Format note: Difficulty: Stretch. Format: written case, with a data pack. Industry: Packaged food. Region: South Korea. Interview length: about 40 minutes. The company is fictional and all figures are illustrative.
2. Answers to clarifying questions
Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.
If asked: How does Hanbit judge a price?
Answer: It pays no more than 8 times EBITDA (earnings before interest, tax, depreciation and amortisation), counting the savings it can bring (illustrative).
If asked: What could Hanbit bring?
Answer: Its own sauce factories would cut Dasom's ingredient costs by about 3 percent of sales. Its sales team supplies convenience stores across Korea and could sell KRW 30 billion of kits a year there, at a 10 percent EBITDA margin (illustrative).
If asked: How is the market doing?
Answer: Dasom's sales fell from KRW 140 billion two years ago to KRW 120 billion this year (illustrative).
3. The hypothesis a strong candidate states
Listen for an early, testable guess like this one. It does not need to match word for word.
Dasom is expensive on its own. My hypothesis is that Hanbit can justify the price only through the savings it brings, and that falling sales could push the price above its limit.
4. A model structure
Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.
- Highest price = EBITDA with savings x Hanbit's limit of 8 times, today and if sales keep falling
- Dasom on its own: EBITDA, margin and asking multiple
- Key: Savings only Hanbit can bring: sauces and convenience-store sales
- Falling sales and the margin next year
- Bid price and payment terms
Exhibit 1
Reveal to candidate: when they ask for this data, say "Open Exhibit 1" (they press "Show exhibit 1" on their screen).
| Item | Value |
|---|---|
| Sales this year (KRW billions) | 120 |
| Sales two years ago (KRW billions) | 140 |
| EBITDA this year (KRW billions) | 6 |
| Asking price (KRW billions) | 90 |
| Ingredient savings from Hanbit sauces (% of sales) | 3 |
| Extra sales through convenience stores (KRW billions a year) | 30 |
| EBITDA margin on extra sales (%) | 10 |
| Hanbit's highest multiple of EBITDA with savings | 8 |
So-what
The price only works with Hanbit's savings, and sales have fallen for two years, so the bid should rest on next year's lower EBITDA.
5. The working, step by step
Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.
Step 1: Margin today
What a strong candidate does: KRW 6 billion of EBITDA on KRW 120 billion of sales.
EBITDA margin (%): 6 ÷ 120 × 100 = 5
Step 2: Asking multiple
What a strong candidate does: The asking price over today's EBITDA.
Asking price as a multiple of EBITDA: 90 ÷ 6 = 15
Step 3: Ingredient savings
What a strong candidate does: 3 percent of sales, in KRW billions.
Ingredient savings (KRW billions a year): 120 × 0.03 = 3.6
Step 4: EBITDA with savings
What a strong candidate does: Plus 10 percent on KRW 30 billion of convenience-store sales.
EBITDA with savings (KRW billions): 6 + 120 × 0.03 + 30 × 0.1 = 12.6
Step 5: Multiple with savings
What a strong candidate does: The asking price over EBITDA with savings.
Asking price over EBITDA with savings: 90 ÷ (6 + 120 × 0.03 + 30 × 0.1) = 7.14
Step 6: Curveball: sales keep falling
What a strong candidate does: Interviewer: "Sales could fall another 10 percent next year, and Dasom's own margin could slip to 4 percent." Sales next year, in KRW billions:
Sales next year (KRW billions): 120 × 0.9 = 108
Step 7: EBITDA with savings next year
What a strong candidate does: 4 percent margin and 3 percent ingredient savings on the lower sales, plus the convenience-store EBITDA.
EBITDA with savings next year (KRW billions): 120 × 0.9 × 0.04 + 120 × 0.9 × 0.03 + 30 × 0.1 = 10.56
Step 8: Multiple next year
What a strong candidate does: The asking price over next year's EBITDA with savings.
Asking price over next year's EBITDA with savings: 90 ÷ (120 × 0.9 × 0.04 + 120 × 0.9 × 0.03 + 30 × 0.1) = 8.52
Step 9: Highest price at 8 times
What a strong candidate does: Hanbit's limit applied to next year's EBITDA with savings, in KRW billions.
Highest price at 8 times (KRW billions): 8 × (120 × 0.9 × 0.04 + 120 × 0.9 × 0.03 + 30 × 0.1) = 84.48
The recommendation to listen for
At the end, say: "The CEO walks in. What is your recommendation?"
Hanbit should buy Dasom Kit, but offer no more than about KRW 84.48 billion, not the KRW 90 billion asked. First, the asking price is 15 times today's EBITDA of KRW 6 billion, on a 5 percent margin, which is expensive on its own. Second, Hanbit can bring savings no other buyer has: its sauces cut ingredient costs by KRW 3.6 billion, and its convenience-store channel adds KRW 3 billion of EBITDA. With these, EBITDA is KRW 12.6 billion and the price is about 7.143 times, inside the limit of 8 times. Third, sales are falling. If they drop another 10 percent to KRW 108 billion and the margin slips to 4 percent, EBITDA with savings is KRW 10.56 billion. The price then becomes about 8.523 times, above the limit. So the bid should rest on next year's lower EBITDA: 8 times KRW 10.56 billion is KRW 84.48 billion. Part of the price could be paid later if sales stop falling. The main risk is that convenience-store sales take longer to build than planned. Next, test Dasom kits in 200 convenience stores before signing.
Risks a strong answer names: Convenience-store sales may take longer to build than planned; Meal kit demand may keep falling beyond next year.
Next steps: Test Dasom kits in 200 convenience stores before signing; Check in due diligence why sales fell, by channel and by product.
Strong versus weak
A strong answer
Valued Dasom with the savings only Hanbit can bring, tested the price against falling sales, and turned that into a bid and payment terms.
A weak answer
Rejected the deal at 15 times EBITDA without counting the savings, or accepted it at KRW 90 billion without testing falling sales.
Score the candidate
Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.
Total
0 out of 25
Score all five criteria to see the band and the feedback template.
Next: another case in Partner mode
Swap roles and run the next case, so you both practise answering and scoring.