Nantucket Nectar Harvard Case Solution & Analysis

To sell the company:

The founders who want to sell their business due to the reason they may be be tired of doing the business or they want half or full exist from the business. If an owner of the business wants to liquidate whole of his equity then acquiring other investors will result in lower acquisition price. On the analysis of financial statement of Nantucket Nectars, we have come to know that Nantucket Nectars is underperforming as it has negative cash flows of $36000 in 1996 which was negative $71000.

Although the future cash flows are showing good levels but these all are projection only and seems to be misleading as there was cash in hand of $2000 in 1996 and it was projected as $1446000 in 1997. It is due to the inflow of subordinated loan of $2094000 that there is a risk that what will happen if company is unable to receive loan and is lender do not agree to lend.

Recommedation/ Conclusion

It is recommended that Nantucket Nectars’ management should sell the company due to following reasons:

  • The sell of Nantucket Nectars will help owners to invest the proceeds to another business for example in IT business due to its growth and profitability.
  • Going public may not be accepted by Mr Mike as he is 55% of the shareholder of the company and may want to realize its investment at this time.
  • The company’s failure to sell juices through supermarkets has resulted in this situation however, the company has tried but it has failed to acquire shelves space from these supermarkets. In addition,competition with competitors has also strengthened the decision to sell the company......

 

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