Metapath Case Harvard Case Solution & Analysis

Summary

The case introduces Metapath, formed through the joint venture of Securicor Telesciences Inc. and a consulting company in January 1995. The company was formerly known as Securicor Wireless Networks with the purpose of developing a software that would allow the Network operators to evaluate the amount of calls that were on their network at any point in time. Initially, the company faced slow sales growth, attributed to the lack of clients available to them. SWN took additional capital from its existing investors and brought two new firms namely Norwest capital and U.S venture Partners. Which, in turn, enabled the company to enhance its position through increased revenues in the market. According to the case, on September 29th, 1997 the CEO of Metapath was considering two different offers from Celltech Communication and Robertson & Stephens Omega Fund (RSC). Celltech a Wireless product company, recently offered IPO a deal, under which the shareholder would receive common stock at closing, valued at $114 million. Whereas, the market capitalization of Celltech was approximately $260 million. Furthermore, the second offer was from RSC in which, it would buy $11.75 million stocks at a $76 million pre-money valuation. Therefore, it could be evaluated that, the CEO of Metapath was faced with the tough decision of choosing any one of the following offers, which could have significant adverse or favorable impacts on the long-term future prospects of the company in the market. Moreover, it can be assessed from the case that, in September it raised $9 million from four rounds, where it could be evaluated that the first two rounds occurred simultaneously at the establishment of Metapath and the initial funding amounting to $1.6 million was initiated by Bessemer and STI for which they were given redeemable preferred stocks. Additionally, the third round was also initiated by Bessemer, which generated an additional $1 million. Similarly, Bessemer was given redeemable preferred stocks in its place and the fourth and final round contributed towards generating $7 million at $1.62 per share, instead of its prior three rounds at $1.05 per share. The contributors to the funds were granted redeemable preferred stocks for their investment,which, in turn, raised the investors’ confidence toward their investment in the company.

Metapath Case Harvard Case Solution & Analysis

3). Strategic Choice

After analyzing the case, it can be determined that, Metapath should accept the offer given by Celltech.It planned to acquire Metapath for $115 million, which was a generous offer considering Metapath’s market positioning and revenues stream amounting to $25.6 million annually. It can be evaluated that, the acquisition could significantly benefit Metapath, as it would allow the company to use the already established sales, distribution and marketing infrastructures of Celltech to reach its clients which, in turn, could decrease its sales & marketing costs, enabling the company to use the existing operational SOPs of Celltech to further decrease its operational cost through operational synergies. Moreover, it can be assessed that, Celltech and Metapath were relatively alike in which, both companies targeted the relatively similar clients and were considering to engage globally................

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