The third meeting will be five years after the first two meetings. The business has been successful and Dave’s business projections have been substantially met. Based on a net income multiplier of 10:1, Tai-Ga is now worth $100 million. Andy has become seriously ill and wants to sell his stock and withdraw from the business. Two persons have expressed interest in buying Andy’s stock, but issuing new stock is also a possibility. One person is the company’s CFO, Brian Bolton. Brian came on board about six months after Tai-Ga commenced operations and has been instrumental in managing the financial aspects of the company’s explosive growth. Brian has expressed interest in acquiring up to 2% ownership in Tai-Ga via compensatory stock options. 

The other investor is Acme Manufacturing, one of Tai-Ga’s major suppliers: They wish to acquire up to 10% ownership. They require your input on the best way to approach the restructuring. Over the last five years, Tai-Ga's total net income has amounted to $17.5 million after reasonable salaries were paid out to the owners over the years. Of that $17.5 million, $5 million has been invested in inventory and other operating assets. The remainder ($12.5 million) is in cash. The owners have expressed interest in distributing $2 million of the cash in some fashion, and they want you to consider that in your memo. The remainder of the cash will be retained in the business to fund future growth

Andy’s options and your recommendation for ending his ownership interest

Tai-Ga’s options and your recommendation for adding Brian and Acme as new owners

The capital structure (debt vs. equity) of your restructuring recommendation