Scott Peterson Company

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Recommended: Business negotiations

1. Evaluate the company. How much do you believe the company is worth? Bring to class a written bid showing how much you would pay for it if you were Scott and Peterson.
The company’s total assets is around $2.4 million and company’s Net Sales is around $5.5 million with the Net Profit of around $0.14 million. From the historical performance provided in the case, it shows there is a gradual growth in the profitability and the overall sales. It depicts the potential of the company to grow. Under the right stewardship this company could make around half a million of profit in a calendar year in next three years. However I believe I would not bid this company by the rule of thumb, which says the value of the company should be 3 times the net sales. …show more content…

The main issue for the company not to grow is the differences in thoughts between two owners. In order to resolve the ownership situation, both Scott and Peterson have to be ready to sit down in a meeting. They should probably include their financial managers to decide that one of them will buy out the company. Or they should both come to conclusion to sale the company to third party. Buying the company from either one of them is not going to be a cheap affair as one of them needs a lot of financing backing up. One should be ready to change the organizational culture and improvise the business processes to adopt a successful transition. If one of the buyers is not ready for the changes and thinking of continuing the regular processes then I would recommend them to sale out the company to third …show more content…

I would like to raise at least 20 % of the investment from them and I have to pay them very low personal interest. If I am able to raise 20% then I could start seeking financing from bank or provide my plan to SBA to assist me.
• Banks and SBA: The portion of the acquisition and other personal assets would act as collateral needed for the bank. To attract bank I would offer 10% share of the company to the bank after acquisition process is completed. Before I seek any loan from bank I would discuss my business plan with SBA’s to find out the better financing options
• Venture Capitalists: I would offer 15% of share to the venture capitalists who may want to invest for my company for around 2 million. Total acquisition cost is around $7 mil. I will be raising 2 million from my family members, 2 million from venture capitalists and 3 million from financial institution.
4. Assume you do purchase the company: What specific actions would you plan to take on the first day? By the end of the first week? By the end of six months? Explain how and

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