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Should a fund pay PLN 600 million for a packaging 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

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

A private equity fund asks whether to pay PLN 600 million for a family-owned packaging maker in Poland (fictional; the business has no debt). Last year it had EBITDA of PLN 80 million, depreciation of 20 million and capex of 25 million, and working capital rose by 5 million. Tax is 20 percent (illustrative). Invested capital is PLN 400 million. The fund's cost of capital is 9 percent. Is the price sensible?

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. 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.

Is the price below what the cash is worth? Value = free cash flow / (cost of capital minus growth), compared with PLN 600 million (this comes from the question)
- Free cash flow today
- Quality of the business: ROIC against the 9 percent cost of capital
- The price as a multiple of EBITDA
- The growth the price assumes, and the value at a cautious growth rate

4. 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: NOPAT
What a strong candidate does: EBIT of 80 minus 20 is 60; keep 80 percent after tax.
NOPAT (PLN millions): (80 - 20) × 0.8 = 48
Step 2: Free cash flow
What a strong candidate does: NOPAT 48, plus depreciation 20, minus capex 25, minus 5 of working capital.
Free cash flow (PLN millions): 48 + 20 - 25 - 5 = 38
Step 3: ROIC
What a strong candidate does: NOPAT divided by invested capital of 400.
ROIC (percent): 48 ÷ 400 × 100 = 12
Step 4: Price multiple
What a strong candidate does: Price divided by EBITDA.
Price divided by EBITDA: 600 ÷ 80 = 7.5
Step 5: Free cash flow yield
What a strong candidate does: Free cash flow divided by the price.
Free cash flow yield (percent): 38 ÷ 600 × 100 = 6.33
Step 6: Growth the price needs
What a strong candidate does: Price = cash flow divided by (9 percent minus growth), so growth = 9 minus the yield.
Growth needed forever (percent a year): 9 - 38 ÷ 600 × 100 = 2.67
Step 7: Value at 2 percent growth
What a strong candidate does: Next year's cash flow, 38 times 1.02, divided by 0.09 minus 0.02.
Value at 2 percent growth (PLN millions): 38 × 1.02 ÷ (0.09 - 0.02) = 554

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

The fund should want this business but not at PLN 600 million unless it can confirm growth: at that price it needs free cash flow to grow about 2.7 percent a year forever, while at a more cautious 2 percent the business is worth about PLN 554 million. The business itself is good: it earns a 12 percent return on capital against a 9 percent cost, and turns about 38 million of its 80 million EBITDA into free cash. The risk is that capex of 25 million, only a little above depreciation of 20, may be too low to keep the machines up to date, which would cut future cash. As a next step, review five years of capex and customer contracts, and open the bidding nearer PLN 550 million.

Risks a strong answer names: Capex may be held low before a sale, flattering free cash flow; One or two large customers may account for much of the volume.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.