How to Sell Better

1. It appears that the management should buy the John M. Case Company.  The company seems to be extremely healthy.  The company doesn’t seem to be risky as its sales have grown every year since 1955.  Also, the desk calendar market has high barriers to entry, with price being the main point of competition and 80-90% of the market being dominated by Case and one other competitor.  At present, the company has an low debt to equity ratio, allowing it room to borrow money if needed.  The future also looks good for the Case Company.  The management could keep things as they are and stay profitable with the 12.9% to 14.5% profit margins of the last 4 years.  Or, the management can also increase profits through the cheaper manufacturing in Puerto Rico, and expansion of the company’s product lines into planning and appointment books.

Not only is the Case Company healthy, the asking price is $2-5 million less than the value of the company.  As long as the management’s calculations of debt servicing are correct, it could be the management’s best interests to purchase the Case Company.  Nevertheless, the management must still find external financing and prove that they can pay off the debt associated with purchasing the Case Company.

2. Not sure about exhibit 4.  The NWC doesn’t fall below the $3 million requirement.  From reading the case, it appears that the management still needs to come up $9.5 in funding to purchase the Case Company.

 

3. The management may want to obtain terms that allow them keep control on the company.  Allowing the debt covenants to restrict the management from making decisions such as entering the appointment planner market, would put them in a situation much like when Mr. Case was in control of the company.