Jim Sharpe – Final Exam Harvard Case Solution & Analysis

Jim Sharpe – Final Exam Case Study Solution

  1. Learnings from searching business
  • The owners of the small companies are often unwilling to search for the partnerships and workforce for the complete profit sharing and control to others by giving away their entire organization.
  • To make the offers for the acquisition or investment in any business requires quick decision making and bidding quick offers for the success of deal quickly.
  1. Method of evaluation
  • The self-assessment of Jim Sharpe shows the learning about his nature of working and experience which determines that he is still ready to start his own business rather he should gain some experience and work in thecorporate world to get more information.
  • The timeframe for searching the business for the purpose of buying took around 21 days and 10 months and it will take around 2 more years for getting the job experience at least and arranging resources.
  • The focus on the Jim is towards getting overall control and not taking tensions about arranging the funds and making payments on time and hiring employees for the organization at the moment.
  • Resources of the Jim are around $150,000 and the income of his wife which increases confidence in arranging the required funds for Jim by doing the Job and earning money.
  • Jim has learned from the sourcing deals that it requires certain projections and the clarity of the objectives for getting the deal accepted by providing an offer of the purpose and amount of financing required.
  • Biding of the deals requires a strategy which makes the deals apparently successful by forecasting the projections with due care.
  • The deal with Press Alloys required the Jim to learn the negotiation skills by involving the stakeholders for the success of deals by networking with the relevant parties.

2.     The opportunity for Press Alloys:

  • The company was evaluated by lining up with a network of business brokers, venture capitals, lawyers, bankers and insurance companies.
  • There was an opportunity for Jim to get the ownership in terms of management of the company’s affairs and decision making.
  • It was also evaluated that the normal practice of the accountant to inflate the worth of company’s assets and withholding for getting a better deal offer.
  • The opportunity lies with the better negotiation skills for dealing with the brokers because it is very difficult to get a chance to deal with the company directly for getting an offer.
  • The company was showing poor profitability and has some restrictions too before purchasing the company.
  • The offer contained the restriction so that Jim may not know the actual circumstances by communicating with the employees and customers.
  • The opportunity was to maximize its market share by cutting its cost to get the best out of the deal.
  • The opportunity of the deal would lead to company’s deductible expense and hence lower taxation.

Jim Sharpe – Final Exam Harvard Case Solution & Analysis

 

 

3.     Critiques of theproposal:

  • It contains ahigher amount of investment in inventory by getting around 80% values which need to be altered to around 70%.
  • A non-compete agreement can be questioned because it contains ahuge amount for a longer period of 6 years.
  • It will increase finance cost which needs to be taken into consideration.
  • It is also questioned to take into consideration the value of thenote and should be adjusted more.
  • The changes in projections would be done in a manner so that the amount spent on inventory is reduced by 50000 and the amount of loan in terms of notes is also decreased to 550000 and equity should be around 250000 so that the capital structure is managed.Whereas, the amount of non-compete agreement is decreased by 20000. This would lead to forecast the projections even better and relatively consistent for the company.

4.     Schedule 1:

Jim Sharpe/Press Alloys

Range of Values Worksheet

(Show calculations)

Schedule # 1

Valuation Amount2,047,000_____________

Book Value    (Stockholder’s Equity)704,000________________

Adjusted Book Value                                                _804,000 (704+100) ________

Earnings Multiple                                                     Sales Growth_____

This is chosen because it shows the better position of the company’s growth in terms of sales and achieves its objectives...................

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