Nantucket Nectar: The Exit Harvard Case Solution & Analysis

Decision to Sell the Company:

The founders of the company have to decide if it is the right time to sell the company. Tom Scott and Tom First both believe in the upside potential of the company however, they are also concerned about holding the stock of the different company. The owners started the business with $17000 of savings. The current value of the company is around $17 million, which shows the return that will be generated by the owners on selling the company.

The owners should sell the company but should remain in the management of the company. If any big company like Coca Cola acquires Nantucket, then the owners will have enough capital to run the company successfully and increase the value of the company and realize the potential of Nantucket Nectars, which is difficult at the time as the company is unable to increase the share due to different monopolies in the market.

The company is finding it difficult to get the shelf space in big stores which will be solved if the company is acquired by one of the potential buyers. It is also facing problems to get the materials due to the bargaining power of the competitors, which will also be solved. The current employees of the company who have worked hard in building the success for the company and expanding it should be also be retained by the acquirer so they are not disheartened by the sale of the company.

Selling the company will also help it in getting the services of the distribution network of the buyer who could utilize the full potential of the company as they will already have a vast distribution network. The example can be taken of Coco Cola, which is one of the biggest beverages company in the world with the huge distribution network all over the world and by utilizing the network and launching the products, Nantucket products can be introduced all over the world.

The cultural differences between Nantucket and the acquirers can create a problem for the acquirers as Nantucket is very informal unlike the big companies that are planning to acquire the company which can cause problem for both sides, the management of the Nantucket and the acquirer as they will have to change the culture to align with the culture of their own company.Moreover, the current employees might also find it difficult to adjust to the culture of the new company and they might not be able to work with the same enthusiasm as they have before in developing the company which can affect the future performance of the company and also the projected cash flows.

Possible Sale Strategy:

The best strategy to sell the company would be to retain the management of the company and synergize the operations like distribution, shelf spaces and the working capital and capital expenditures, due to the stature of the interested companies to acquire Nantucket it could be possible to overcome the problems Nantucket is facing in procurement and marketing. However, the price of the company should also be reasonable so that the owners get the return for the time they have worked in the company to develop it from a small shop to a business, which has revenue more than $29 million in a year. The employees of the company should also be benefited from the sale of the company. The sale agreement should include the contract that the employees of the company should stay employed even after the sale and get all the benefits they are promised by the current executives of Nantucket which will also help in sustaining and improving the growth of the company and achieving the projected sales target.

The company should not only focus on the price that they will receive from the acquirer but should also look at the companies, which will help Nantucket in achieving its long term goals, and enable it to exploit the potential of the company and would have the same sought of culture and motivation to drive the business so that the distinct image of Nantucket stays intact and help it keep all the advantages it already has like the story of Nantucket.

Nantucket should also consider selling the company to the party, which has more long term focus on the development of the company as compared to the party which is expecting only short term returns from the company and is trying to acquire it to enhance its profitability as it will put pressure on the employees of the company and might create conflicts. Moreover, the acquirer should have good cash inflows to fund the requirements of Nantucket to grow and meet its potential.......

 

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