The Tale of Lynx Solution Harvard Case Solution & Analysis

Q1.)    What are the risks of this investment and how might they be mitigated?

The potential risks of this kind of investments involve the risk of losing the amount invested in the development of software for advertising through wireless technology because the development of the software required huge investment in the form of salary of software engineers and other overheads, which were necessary for the development of this software technology and if that software was not successful after the development phase, then it would be a disaster for the venture capitalist, who had invested their customers’ funds in this business opportunity. However, care must have been taken during the development phase that the software should meet all the requirements and functions that are intended to be developed and use for the advertisement and the software should be compatible to be used with the wireless technology. Furthermore, the conflicting structure of the business ownership has made the investment riskier because the CTO and CEO are in conflict with each other and the chairmen had to play his role so as to resolve their conflicts. All these conflicts were wasting executives’ precious time, which could have been used in the wider success of business operations. Additionally, rumors regarding the inappropriate use of customer data by Lynx had damaged the reputation and resulted in a rapid decline of customers. Though, rumors were encountered by Lynx but they required to incur some cost due to the nature of its business, which involved the use of customers sophisticated data that can put it into potential risks and in case its database of customer data was compromised by internet spy, then this would result in an irrecoverable loss of its reputation and customer base because customer would be exposed to the losses that might have resulted if customers’ data was misused; therefore, effective security systems should be used in order to avoid the unauthorized access to the customer database.

Q2.)    What are the sources of potential value creation in this investment?

However, the ability of individuals in the successful launch of this advertisement software was the key source of value creation but the skills and experience of Doug were not utilized efficiently. In addition, Doug was equipped with marketing and selling skills that could add value to the business through increase sales and customer base because he had been working with venture capitalist where he used to attract new investment for the new business ventures; as a result, the skills, experience and knowledge of Doug was a potential source of value addition, which was not recognized and properly utilized. Furthermore, Clark Evans, who was initially hired in order to discuss the issues of Lynx Solutions’ employees and find out the ways to resolve them in order to retain them for the maintaining the skilled team and well-trained staff of the organization. This was another form of value creation source because he helped Milmo in retaining the valuable staff  and later on he was selected as the new CEO of the company in curtail time when an existing CEO was vacant and the company was in need of a CEO, who could be a best fit for this position.

Q3.)    What are the key areas of due diligence, including any that are specific to this business?

Due diligence is the process of establishing that the facts and statements that has been presented in relation to any business opportunity are realistic and achievable. Moreover, it is a process of confirming the representations made with the documents for the correctness of these representations. However, the key areas of due diligence include the financial review of the investment opportunity because the financing of any business opportunity is the key for the successful implementation. In addition to this, due diligence should be carried out regarding the legal aspects as well as the financial aspect in order to avoid any non-compliance issues. For the meantime, the contracts that the business opportunity had made with suppliers, employees or other business partners should be real and their authenticity must be checked. However, the due diligence specific to the Lynx Solution would include the feasibility of software and advertisement program using wireless technology should be confirmed........................................

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