Bain M&A Case - E-Commerce in the Airline Industry

This is a Bain case interview walkthrough using the Mergers and Acquisitions framework.

If you're curious to see how an expert drives a full case from start to finish, you're in the right place! You can even pull out a pen and paper and do the case yourself!

[chutoa.toptop]

earlier the interviewer mentioned the perpetuity discount rate of 20% at 10:58, and the client is making 12m$ a year. Doesn't it mean the perpetuity present value is only 60m$ (=12m$/20%), while the investment cost is 100m$, thus making it unprofitable?
but later on he went ahead with the payback period of 8 years (=100m$/12m$) without considering the discount rate. Did he forget he had mentioned it or I get it wrong somewhere? Someone kindly explain.

[Insainly]

Have you also thought about considering, besides the revenue potential and cost savings, the stake in the company itself? For a rough estimate, you could ask the interviewer for the costs of operating the e-commerce business and add the free cash flow (FCF) with the terminal value (TV) to come up with the firm value. This should be the same as the equity value currently, as we don't have any cash or debt information given here and have just started the business. To conclude, 20% of the equity value should be close to 100 million cash units, making it a nice target from an investor's point of view.