Project Eskmont — Casino Resort Take-Private
A 2.5-hour Gaming & Lodging / Special Committee Take-Private case study with a complete model answer
Modeled After
J.P. Morgan
A special committee valuation binder for an integrated resort: a property-level EBITDA build on RevPAR, ADR, occupancy, win per table per day, slot win per day and food and beverage per occupied room night; undeveloped land benchmarked to local land comparables on a per-acre basis and sensitized across a range; a probability-weighted development pipeline; brand value as a discrete block; and the most developed premiums-paid database in the set
Structure and exhibit set are modeled after J.P. Morgan. The company, the financials and every figure in this case are entirely our own.
The Situation
Eskmont Island Resorts Limited is an integrated resort operator incorporated in the Commonwealth of the Bahamas with principal offices at Port Halleigh, Eskmont Island. It is three businesses wearing one balance sheet, and the whole difficulty of the case is that the market prices them as though it were one.
Eskmont Island Resorts Limited
- Sector
- Gaming and lodging — three owned integrated and luxury resorts with 3,100 keys, a 23-hotel managed and franchised fee stream, a branded-residence licensing program, a 42% casino joint venture, a marina concession and 291.0 acres of undeveloped land
- Size
- Geography
- Eskmont Island and Providenciales in the Caribbean, with managed and franchised hotels across nine countries and a joint-venture casino in Connecticut
- Ownership
- Situation
The Prompt
You are the financial advisor to the Special Committee of the Board of Directors of Eskmont Island Resorts Limited. 00 a share in cash.
Supporting Materials
What you are handed at the start of the case, in the format a real process would use.
Blank modeling template
XLSXUnlock
What You Have to Produce
The deliverables, in the order the committee will read them. The exercise runs 150 minutes.
PART 1
Build property EBITDA from the operating statistics
PART 2
The fee stream, and the fees the Company charges itself
PART 3
The blocks with no earnings — land, pipeline and brand
PART 4
The joint venture, the concession, and the two peer universes
PART 5
The corporate bridge
PART 6
The discount, and what would close it
PART 7
The evidence, the field and the recommendation
How to Approach It
The order a strong candidate works in, and why. This is the shape of the answer — the finished answer deck and Excel model are in the solution set below.
- 01
Decide what each block is before you value anything
- 02
Build revenue from units and rates, not from margins
- 03
Find the fee the Company charges itself, and decide where it lives
- 04
Take the land net of what the pipeline consumes
- 05
Charge the overhead, and be able to defend the multiple you charged it at
- 06
Deduct every claim exactly once, at value rather than at book
- 07
Locate the discount before you try to close it
- 08
Give the Committee a price and a price you would refuse
Key Concepts
The ideas this case is built on. Know these cold and the case becomes a question of execution rather than knowledge.
Sum of the parts, and why one multiple destroys it
A sum-of-the-parts analysis is not a valuation with more tables in it. It is a claim that a company has no single enterprise value, no single earnings figure and no single cost of capital, and that any exhibit which pretends otherwise is answering a question nobody asked. A case needs one where the segments would trade at materially different multiples in the hands of different buyers, or where some of them have no earnings at all; a blended multiple is then an average of things that are not comparable, and the average is nobody's price.
Capital-light fee income versus owned real estate
A management or franchise fee earned on a hotel somebody else owns is an annuity: it requires no capital, it survives a sale of the hotel, and it is largely insulated from the cost of the building. The market pays a much higher multiple for it than for the hotel itself, which is why the branded operators split into asset-light and owner-operator peer sets that do not trade anywhere near each other. Valuing a company that does both at one multiple sets the difference between them to zero, which is the same as saying the fee business is worth exactly what a hotel is worth.
Capitalized corporate overhead
Unallocated corporate expense is a permanent charge against the value of the segments it supports, so a sum of segment values that does not deduct it is a sum of what the pieces are worth to somebody who never has to run the company. The charge is the annual overhead capitalized at a multiple, and the multiple is a judgment: the EBITDA-weighted average of the multiples the segments carry is the defensible choice, because part of the overhead protects earnings the market pays a high multiple for and part protects earnings it does not. Its omission is invisible to every numeric check, because the mistake is a missing row rather than a wrong one.
Intersegment fees and the double count
When a company both owns hotels and manages them, it charges itself a fee. That fee is a cost in the property segment and revenue in the fee segment, and both statements are true. The danger is valuing the property on earnings before the fee while also valuing the whole fee stream — the same dollars then appear twice, at two different multiples. The clean test is an identity: the segment EBITDA figures you are valuing must add to consolidated EBITDA. If they do not, something is being counted twice or not at all.
Cap rate versus EBITDA multiple
A cap rate is net operating income divided by value, so it is the reciprocal of a multiple — but the two are not interchangeable, because they are quoted by different buyers underwriting different risk. Real estate let to third parties on long leases trades on a yield, and quoting it at an EBITDA multiple invites a comparison with an operating business that is exposed to demand in a way a lease is not. Carrying the implied multiple alongside the cap rate is useful for one purpose only: weighting that segment when an overhead charge has to be capitalized across the whole portfolio.
Land valued per acre against local transactions
Undeveloped land has no earnings, so no multiple of earnings reaches it. It is valued against what comparable parcels have actually transacted at, per acre, in the same market — which on an island means a handful of transactions and a wide range. Two adjustments matter. Serviced land, with road, water and power to the boundary, is not the same asset as unserviced land, and the difference is a cost per acre. And acreage already committed to a development project is carried inside that project's value, so it must come out of the land block or it is in the answer twice.
Probability-weighted development pipeline
A half-built resort is money already spent, money still to spend and earnings that begin several years out. Valuing it means discounting the remaining spend forward and the stabilized value back, at a rate that reflects construction risk rather than the company's own cost of capital. Then it has to be weighted: a permitted project under construction is not the same asset as an approval, and carrying both at full value prices a set of drawings as though it were a building. The difference between the weighted and unweighted totals is the risk charge, and it belongs on the page.
Recourse, non-recourse and trapped cash
Not every liability on a balance sheet is a claim on the group, and not every cash balance is available to it. Non-recourse project debt is a claim on one asset, so it is deducted inside that asset's value and not again at the group bridge — deducting it twice foots everywhere and is wrong by the whole facility. A casino's cage minimum is cash the regulator requires on site: it cannot be swept, it cannot repay debt, and netting it against borrowings overstates the equity by its full amount.
The conglomerate discount
A conglomerate discount is the gap between what a company's pieces are worth separately and what the market pays for them together. Stating it is easy; locating it is the work. Run the bridge backwards from the market capitalization, hold the operating segments at your own marks, and read off the residual the market is implicitly ascribing to everything else. That residual tells you what the market disbelieves. Closing the gap then requires an action — a sale, a separation, a sale-leaseback — and every one of them carries friction, transfer duty or standing cost that has to be priced before the route can be recommended.
Minority interests at value, not at book
A third-party interest in one property is a claim on that property's value, so it is deducted at that share of the segment value the analysis itself produced. A book carrying amount is an accounting residual that reflects historical cost and past distributions, and it will not equal the economic claim. The same logic runs the other way for an equity-method joint venture: the company owns a share of the venture's equity, not a share of its assets, so the venture's own debt comes off before the share is taken.
What Makes It Hard
The specific traps in this case — the places candidates lose the assessment without noticing.
Check Your Answer
Type the figures you produced and find out how many are right before you open the worked answer. You get a verdict and, where you are off, a pointer to the part of the build to re-check — never the number itself. Everything you type stays on this device.
How to type a figure. Digits, with an optional unit: 1,234.5, $1,234.5, 2.6x, 21.4%. For a negative use (20.0) or -20.0. Enter as many decimals as you carried — precision is never penalised.
What the Case Asked For
The arithmetic is only half of it. Tick off what you actually produced — this half is yours to score, because nothing can grade a written recommendation from a checkbox.
The Model Answer
The worked answer in full: answer deck and Excel model, built the way a banker would actually build them. It is a reference, not a submission — a strong answer under the clock is far shorter.
What the Solution Covers
- —Property-level EBITDA build
- —RevPAR, ADR, win per table per day and slot win per day
- —Undeveloped land valued at $/acre against local comps
- —Probability-weighted development pipeline
- —Premiums paid database construction
- —Brand and franchise value as a discrete block
Answer Deck
Full model answer, banker-formatted
Upgrade to Diamond
Sign up and upgrade to Diamond to unlock the answer deck, the Excel model and the audio walkthrough.
Get StartedThe Excel Model
The model is linked and tied out end to end — every schedule, every formula and every check, in the file itself.
Downloads are available to Diamond members
Excel Model and PowerPoint Deck and Answer Deck (PDF) — yours to open, edit and rebuild
Walkthrough
A conversational walkthrough of how to approach the case under time pressure — where to start, what to cut, and how the recommendation gets defended.
Audio Walkthrough
How to approach Project Eskmont — Casino Resort Take-Private
60-second preview — upgrade to Diamond for the full walkthrough
Frequently Asked Questions
When is a sum of the parts the right frame?
When the segments would trade at materially different multiples in different hands, or when a meaningful share of the value has no earnings behind it. Both are true here: a capital-light fee stream and an owned resort trade nowhere near each other, and land, a development pipeline and a royalty produce no EBITDA at all. If neither condition held, a sum of the parts would be a segment table with a valuation title on it, and the blended multiple would be the honest answer.
How do I choose the multiple to capitalize corporate overhead at?
Ask what the overhead is protecting. It supports every operating segment, so the defensible choice is the EBITDA-weighted average of the multiples those segments are carried at — part of it protects earnings the market pays a high multiple for and part protects earnings it does not. Using the owner-operator mark alone is simpler and understates the charge; using the highest mark overstates it. Whatever you choose, show the answer with the charge and without it, so a reader can see the size of the decision rather than taking it on trust.
The Company manages its own hotels. Do I eliminate the fee or not?
You eliminate the double count, which is not quite the same thing. Either value the properties on EBITDA after the fee and value the fee stream in full, or value the properties before the fee and value only the third-party fees — but not both. And think about the multiple on the internal fee: a fee charged to yourself disappears the moment the property is sold, because a buyer of the property buys the earnings the fee is carved out of, so it is worth what the property is worth rather than what a third-party annuity is worth. The identity that proves you have got it right is that the segment EBITDA figures you value must add to consolidated EBITDA.
Should the land be valued at the median comparable or at a range?
Both, and the range is the more honest exhibit. Four transactions on an island is a small sample and the observed spread is wide, so a single midpoint conceals the largest source of uncertainty in the whole analysis. Carry the block at a central mark, put the observed low and high on their own row of the football field, and adjust for the difference between a serviced parcel and an unserviced one — that adjustment is a real cost per acre and it is not optional.
Do I charge transfer duty on the land inside the sum of the parts?
No. A going concern that holds land does not pay duty on it, and charging a transaction tax against an asset nobody is transacting understates what the company is worth. The duty belongs in the analysis of a SALE, where it would actually be paid, and that is exactly where it changes the conclusion: it is the reason a land sale delivers less than the mark, and it is a legitimate input into a reservation price.
How should the joint venture be valued?
As an equity claim, not as a share of assets. Value the venture in full, deduct its own net debt, and then take the company's share of what is left. Taking the share of enterprise value first and then deducting the whole of the venture's debt is a common slip and it is wrong by the debt attributable to the partner. And use a multiple appropriate to what the venture is — a regional casino is not a destination resort and does not trade like one.
Is a single blended multiple worth building at all?
Yes, and then you reject it on the page. Building it does two things: it tells you what a reader who reaches for one multiple would conclude, and it lets you show why that conclusion is unreachable. Present it as a reference-only row, never as an indication, and be able to say in one sentence why it lands where it does — usually because a large share of the value has no earnings under it and no multiple of earnings can find that value.
What actually closes a conglomerate discount?
Something has to happen. A sale of an asset converts a contested mark into cash and pays duty for the privilege. A separation moves a business to a higher multiple and creates a standing cost that capitalizes at that very multiple. A sale-leaseback monetizes real estate at a rent the properties have to be able to cover, which is what sizes the transaction rather than the value. Price all three net of their friction. It is entirely possible that none of them delivers what the pieces are worth, and that finding is a legitimate part of the Committee's answer.
How long should the presentation be?
Short enough that the Committee reaches the recommendation. This is a 150-minute exercise and the workbook consumes most of it; what you hand over is the submission a strong candidate produces, not a book a bank sends a client. Lead with the answer, put the evidence behind it, and let each page carry one idea.
About This Gaming & Lodging / Special Committee Take-Private Case Study
Gaming & Lodging / Special Committee Take-Private case study for investment banking interviews. 150-minute format covering property-level ebitda build, revpar, adr, win per table per day and slot win per day, undeveloped land valued at $/acre against local comps. Includes the full prompt, a model answer deck, a tied-out Excel model and an audio walkthrough.
This case study sits in Investment Banking, under Real Assets & Infrastructure. Every case ships with the full prompt, the supporting materials, a complete model answer and an audio walkthrough of the judgment behind the recommendation.
150-Minute Format
The time limit a real assessment would give you
Answer Deck
Included in the model answer
Excel Model
Included in the model answer
Audio Walkthrough
How to approach the case under time pressure
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