TREVECCA NAZARENE UNIVERSITY

ONLINE MBA FINANCE

STUDY QUESTIONS FOR THE FABRICARE CASE

1.What value would you recommend as a starting point for negotiations?As a "final" offer?

2.Are there any elements of the projected cash flows for PBM or Fabricare that trouble you?

3.Assuming that the Fabricare acquisition is undertaken and Roy permits Stuart to purchase an interest in the combined firm, discuss possible financing alternatives for both transactions.Do you think that Stuart will have trouble obtaining bank financing for any amount in excess of the $110,000 of cash that he currently has available?Why?

4.If you were Stuart, would you be willing to pay full value for any minority ownership in the firm?Why or why not?