RightNow Technologies Harvard Case Solution & Analysis

IPO ATTEMPT

A month later, financing banks were traveling to Bozeman to pitch RightNow Technologies. Gianforte and Carstensen in the long run chose Credit Suisse First Boston (CSFB) as the partners to lead them through this IPO. In any case it was not to be thus, the business sector tanked. The NASDAQ list fell by 25% in one week. In this environment of frenzy, the IPO was delayed.

Before the end of August, the NASDAQ had very nearly recouped to its pre-crash level. The group imagined that its new window would be in October. They restarted the street show, going by speculators in Europe and the Midwest, but by that time NASDAQ had slipped back up by 15%.

Carstensen was thankful that the organization did not make it through the IPO.As she believed; company’s financials didn't back the decision of the IPO. The company was excessively small to reap any benefits from an IPO.

STRATEGIC DIRECTION

With cash in the bank and the diversion of an IPO disposed of, the administration group entered 2001 with a concentrate on the rudiments: winning clients and enhancing the item. The load up felt it was time to acquire somebody who could bring another center to the organization's method, Sean Forbes was the craved competitor, Forbes shouted that in the wake of investigating RightNow Technologies and investing time with Greg and his gang inevitably marked on. He accepted RightNow Technologies had an in a broad sense better approach to programming. Both from a viewpoint of conveyance model and a relentless requirement on high moral benchmarks that had been determined to the center of the organization's society.

Forbes made the board and executive team agree to the fact whatever new strategy would be implemented should be able to achieve market leadership, high market growth and high profitability for the company.

It took Forbes 6 months to create the new technique that the organization ought to move into full emphasized client administration programming and afterward utilize that as a foothold to move crosswise over to the next two sections of CRM: promoting mechanization and sales force automation, this will lead the organization into rivalry with SAP, Siebel, and Oracle, however, in the event that the organization can pull this off they are overcome able, the target business is the upper mid-business it’s a market that the huge gentlemen can't stand to seek after with their $500,000 for every year Armani-clad deals fellows.

STRATEGIC TRANSATION

By June of 2002, RightNow Technologies had come back to producing positive money stream after 18 months of outpourings. Gianforte, satisfied with the organization's budgetary position and the new vital and operational course. To actualize the new methodology, there was a crucial need to revamp the product starting from the earliest stage. Gianforte started the enlisting methodology while serving as makeshift head of Sales, after a far reaching recruitment procedure Peter Dunning was concluded for the position. Throughout these inside moves, the organization kept on growing. In 2002, the organization did $26.9 million in income and in 2003; the organization was on track to do about $35 million.

  • 1.      Based upon data in the case, what is a fair value for RightNow Technologies?  If the company hits its forecasts, what could the company be worth in the future?

The fair value of the company is calculated by taking the difference of the total assets of the company less the total liability of the company but the company holds greater liability and the company has a negative value of $13 million. Whereas, the future value of the company is calculated by using the Discounted Cash Flow method giving a value of $159 million.

  • 2.      As Gianforte, what is the lowest price you would sell at? As the venture capital (VC) investors? If these answers are different, how should Gianforte’s views and desires is weighed against other board members/investors?

If the company is valued under the Multiple revenue method and Venture Capital method the values calculated are $82 million and $87 million respectively; whereas the average of the two methods is $85 million, which will be the desired value by the venture capital investors where as the offer made is $50 million for RightNow against that Gianforte seems content.

From a Financial outlook, when contrasted with applicable open organization comparables and transactions, it is considered a reasonable offer. From a current business sector viewpoint, there would be no difficulty exhorting the fact that the board should accept this offer. Yet the vital viewpoint is harder to evaluate in quantitative terms...................................

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