Essay on John M Case

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JOHN M. CASE COMPANY
Mergers and Acquisitions

OCTOBER 6, 2015
FINA 5513D - MERGERS AND ACQUISITIONS
Syed Ali Ahmad (100978220), Long Thanh Dinh (100986227) Zeeshan Halim (100986227)

Table of Contents
Executive Summary .................................................................................................................. 2
Why the J.M.C. Company is an Attractive Target for the Firm’s Management ............... 3
Why purchase the J. M. C. Company by LBO ...................................................................... 4
Target Selection ...................................................................................................................... 4
Industry …show more content…
As the firm's debt capacity is found to be at $16.6 M the management team will have to use $3M cash from the firm in addition to borrowing $6.5M from Venture Capitalist where they would be granted an unspecified number of warrants giving them right to J. M. C. Company shares in the future.
Given the financing plan, the Venture Capitalists will acquire 15% of the company, while the managers are left with a strong 85% ownership granting them autonomy over the operations.

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John M. Case Company

Why the J.M.C. is an Attractive Target for the Firm’s Management
The following gives an outline of the firm's internal strengths and weaknesses and external opportunities and threats. Examination of the data reveals that the company is strong, with the strengths far outweighing the weaknesses, with some sound opportunities for growth with little threat from outside competitors.
Criteria
Strengths






















Weaknesses












Opportunities




Threats







60 to 65% market share
Operations profitable since 1932
Increasing sales since 1955
Average return on capital of 20%
Sales increase 7% (compound rate) over the past five years
Cost reductions yielding increase earnings
Simply technology
Lower variable costs
Predictable customer orders
Low overall tax rate (Puerto Rican tax benefits)
Modern equipment, well
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