M&A & Private Equity Cases
Byju's Acquisition Spree: PE Due Diligence
00:00
Score: 0
Opening
0/20
Info Gathering
0/15
Quant Analysis
0/30
Qual Insights
0/20
Recommendation
0/15
RK
Rajesh Kumar
Principal, Silver Lake Partners
Good morning! I'm Rajesh Kumar, a Principal at Silver Lake Partners. Today, we'll be discussing a potential investment opportunity in the EdTech space.
Our firm is considering a significant investment in Byju's, India's largest EdTech company. However, we're concerned about their aggressive acquisition strategy. Between 2020-2022, they've acquired 10+ companies for over $2.5 billion.
We need your help to evaluate whether this acquisition spree creates value or destroys it. Let me share some context with you.
Our firm is considering a significant investment in Byju's, India's largest EdTech company. However, we're concerned about their aggressive acquisition strategy. Between 2020-2022, they've acquired 10+ companies for over $2.5 billion.
We need your help to evaluate whether this acquisition spree creates value or destroys it. Let me share some context with you.
Company Overview: Byju's
Key Metrics (2022)
| Metric | Value | YoY Growth |
|---|---|---|
| Revenue | $1.26 billion | +120% |
| Registered Users | 150 million | +100% |
| Paid Subscribers | 7.5 million | +87% |
| Valuation | $22 billion | +83% |
| EBITDA Margin | -45% | -10pp |
Major Acquisitions Timeline
Select Your Framework
How would you structure your approach to evaluate whether Byju's acquisition strategy is creating or destroying value?
RK
Rajesh Kumar
Principal, Silver Lake Partners
Good thinking on the framework. Now, you have the opportunity to ask me clarifying questions to gather more information. Choose wisely - you can ask up to 3 questions.
Information Gathering
Select Your Questions (Max 3):
RK
Rajesh Kumar
Principal, Silver Lake Partners
Now let's dive into the numbers. I've prepared several data exhibits for you. Please analyze them and calculate the key metrics that will help us understand the value creation/destruction from these acquisitions.
Quantitative Analysis
Exhibit 1: Consolidated Financial Performance
| Metric ($ millions) | FY2020 | FY2021 | FY2022 | FY2023E |
|---|---|---|---|---|
| Organic Revenue | 340 | 420 | 580 | 750 |
| Acquired Revenue | 0 | 155 | 680 | 950 |
| Total Revenue | 340 | 575 | 1,260 | 1,700 |
| EBITDA | -102 | -201 | -567 | -850 |
| Cash Burn | -150 | -450 | -1,200 | -1,500 |
Exhibit 2: Acquisition Performance Metrics
| Company | Price Paid | Revenue at Acquisition | Current Revenue | Integration Cost |
|---|---|---|---|---|
| WhiteHat Jr | $300M | $150M | $180M | $45M |
| Aakash Institute | $950M | $180M | $350M | $120M |
| Epic! | $500M | $100M | $120M | $60M |
| Great Learning | $600M | $90M | $200M | $75M |
| Others (6 companies) | $250M | $60M | $100M | $50M |
Calculate Key Metrics
Hint: Calculate weighted average based on acquisition prices
Hint: Compare current revenue to acquisition revenue
Hint: Consider revenue growth, integration costs, and opportunity cost
RK
Rajesh Kumar
Principal, Silver Lake Partners
Good work on the quantitative analysis. Now, let's think about the qualitative aspects. What are the key strategic insights from this acquisition spree?
Strategic Insights
Additional Context
- EdTech market in India grew 500% during COVID but is now normalizing
- Regulatory scrutiny increasing on aggressive marketing to parents
- Competition intensifying with Unacademy, Vedantu, and global players
- Customer acquisition costs have increased 3x since 2020
- Byju's burn rate exceeds $100M/month
Select Three Key Insights
Prioritize Risks (1 = Highest)
Liquidity crisis from high burn rate
Regulatory intervention
Integration failure
RK
Rajesh Kumar
Principal, Silver Lake Partners
Excellent analysis so far. Now, I need your final recommendation. Should Silver Lake invest in Byju's at the current $22B valuation? You have 60 seconds to present your recommendation once you click start.
Final Recommendation
Remember: You'll have 60 seconds to present once you click start. Structure your thoughts clearly and support with data from your analysis.
Case Complete!
0/100
Opening & Structure
0/20
Information Gathering
0/15
Quantitative Analysis
0/30
Qualitative Insights
0/20
Recommendation
0/15
Expert Analysis
The correct analysis shows that Byju's acquisition spree has largely destroyed value:
- Paid average multiples of 6.3x revenue vs industry standard of 2-3x
- Integration costs totaling $350M with limited synergy realization
- Acquired revenue growth of only 35% CAGR, below organic growth rate
- Cash burn accelerated from $150M to $1.5B annually
- Strategic incoherence across K-12, test prep, and professional segments
Recommendation: Pass on current valuation or wait for distressed opportunity at 70-80% discount.