M&A Due Diligence & Valuation Entertainer X Advantage Plus

M&A DUE DILIGENCE | STRATEGIC CONSULTING | VALUATION | VIABILITY ANALYSIS

Ruskin Felix Consulting LLC prepared a business strategy report while shedding light on the strategic alliance assessment of Entertainer and Advantage Plus. The Client Al-Zarooni Investments owns the Entertainer and was looking to partner with Advantage Plus for its foray into Group Club memberships. The report highlights the merger and the market analysis for Entertainer and Advantage plus. Through this report, RF Consulting has tried to highlight the advantages and key strengths of the merger. The financial viability of the project has also been assessed by understanding the cost analysis, comprehensive sensitivity analysis, and probability analysis. The report emphasizes on the inhouse development of the merger and lays down specific future opportunities. Through the recommendations, we have tried to provide an expert opinion and assessed the financial viability of the M&A and executed due diligence. The deal was executed completely in 2021 and was successfully implemented.

The Entertainer company has high brand value which can be utilized for expanding business as it’s a market leader in its main industry of providing group discounts coupons with network of hotels, F&B and leisure services. The company has about 75,000 active members and have existing database of 100,000 clients which it can be utilize for furthering the alliance product in the market. The overall strength in the GCC and UAE market is high, and the company can utilize existing strength levels to create awareness of the new product in the market it operates in. The company has surplus capabilities and will be able to put in the cost of marketing and sales that would be assessed for the new proposed product. With the company operating in its present space for many years, it has substantial links, network and value that can be vital to creating a new product and brand.

The overall economy of UAE and GCC has been growing however it has been relatively stagnant in the recent years and has lesser growth rate in its tourism traffic. However, the economy has grown steadily and looks to create events like the EXPO Dubai 2020 to boost its influence in Travel and tourism. 

Based on the understanding on the business strategy, there are a few recommendations that are there for Entertainer and Advantage Plus. The potential for inhouse development is there for the Entertainer, but as per the predicted demand and initial market stance, we would advise Not to focus on the inhouse development as it runs a high risk and has only a 10-20% margin overall while in operation. The company should make an alliance with the Advantage plus, use synergies, market strength, existing clientele to gain market share. Using expertise and created algorithm and network of partners of Advantage Plus.

Analyzing the financial viability of the merger, there are a few assessments that we have made, based on the financial projections. We expect substantial value to be generated from operating jointly. However, even with that increased value, Advantage plus will clearly gain further value with time as it will be able to reduce its operating margin and increase the services based on the number of partners and average memberships. There is thus a great opportunity for the Entertainer to eve and acquire the company advantage plus. RFC also performed a deep assessment of competitors in the field like Privelee in UAE and Saudi Arabia

The alliance will be profitable for both companies The Entertainer and Advantage Plus as per our assessment of the overall market opportunity and cost projections.

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