Question
The CEO has described to you a significant new product addition to the Company. The Management team has agreed on this new course of action
The CEO has described to you a significant new product addition to the Company. The Management team has agreed on this new course of action and has presented the new product addition to the Board. The Board has approved the initiative subject to financing. The Board has agreed with the CEO that there are two separate alternatives open to the Board: 1) The sale of the Company to a larger concern; or, 2) The issuance of additional stock. (The Board does not want to lever the Company further with additional debt.)
The purpose of the project is to write a letter to the CEO of your company and explain to him/her the following:
- The M&A valuation of his or her company. Please use all 4 valuation methods and describe how you arrived at the value you came up with. How quickly can you sell the Company? Who are the targeted purchasers? What process will you use? What is the likelihood of success?
- What is the current market value of the Company as determined by the stock market? What has been the recent trend for the price of the stock? What is the average number of shares traded each day? Can you do a stock offering? What would be the price?
Please see the format for the letter on the next page. Spelling and grammar count. Make sure that your sentences make sense and are in a logical sequence.
A letter that is more than 10 pages is too long.
This project will be due by 7:00 pm on December 12, 2017
Letter format
VIA OVERNIGHT MAIL
Date
Mr. or Ms. ________________________
Title
Name of Company
Address
RE: Financing Alternatives
Dear _______________ (Utilize their first name. You know this person.)
Introductory paragraph
- It was good to speak with you on?
- As requested we have described in the letter - describe the alternatives
Paragraphs 2-?
Describe the M&A valuation, the various valuation methods you utilized and what is your conclusion as to the value.
Next paragraph
Describe the current stock market, trend for their stock, etc. and whether you think an offering can be accomplished and at what valuation and stock price.
Summary
Describe what you believe is the best alternative and why.
Exhibits (?)
Stock chart
Daily trading volume of the stock chart
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started