As early as 1996, Jack Peterson had become discouraged by conflicts with his partner, David Scott, and had sought advice on how to remedy the situation. By 2005, Peterson thought he and Scott had just grown too far apart to continue together and had to find a mutually agreeable way to separate. One alternative was for one partner to buy the other out, but Scott seemed to have no interest in such an arrangement. 

Peterson recalled the executive committee’s annual planning meeting in January 2005: 

It was a total disaster. There were loud arguments and violent disagreements. It was so bad that no one wanted to ever participate in another meeting. We were all miserable. 

What was so difficult was that each of us truly thought he was right. On various occasions other people in the company would support each of our positions. These were normally honest differences of opinion, but politics also started to enter in. 

Preparation Questions

1. Evaluate the company. How much do you believe it is worth? Bring to class a written bid showing how much you would pay for it if you were Scott and Peterson. 

2. What should they do to resolve the ownership situation? 

3. How would you finance the purchase of the company? 

4. Assume you do purchase the company: What specific actions would you plan to take on the first day? By the end of the first week? By the end of six months? Explain how and why.