Because we only have two comparable companies we opt to do our calculations with the industry wide average discount rate. This is just a sample partial case. Apex is looking for a growing stage company as most of its portfolio is rich with these types of companies. Apex's guiding investment philosophy is to provide exceptional returns for our investors by partnering with entrepreneurs and executives to build significant value in their companies. Usually, Apex sought to be the leading investor whatever the stage in order to have one of its representatives join the board of the financed companies. In addition to this the marketing strategy of the company is very effective as it aware the customer base new product range which is not in the market before. In this context, they recently approached a firm which seems to have huge potential for rapid growth: AccessLine Technologies.
Concept of an industrial life cycle 2. The two products were expected to have the same gross margin percentage. The partial valuation equations of Series A, Series B and Common Stock in the case if warrants are not exercised are given in the Excel File provided. Any unauthorized copying, reuse, or redistribution is prohibited. Printed in the United States of America. This is just a sample partial.
After having experienced extraordinary growth for 5 years, a lot of the competitive advantage due to having a new innovative product will disappear and thus the company will tend to perform similar to other companies in the same industry. I entered my current household income yearly, the age at which I would retire and at what percentage I would like make income contributions. It also provides starting ideas as fundamentals often provide insight into some of the aspects that may not be covered in the business case study itself. Implementation framework helps in weeding out non actionable recommendations, resulting in awesome Apex Investment Partners B : May 1995 case study solution. I had to increase my income contributions, lower the amount I projected for living expenses, and increase the current rate of return. Series A has the lower value and thus converts first. Series B must be allowed to redeem all of their shares upon the failure of Accessline to come within 5% of its revenue and income projections for 2 consecutive years.
Assuming that Accessline meets this revenue target, and that no future funding is required, Apex will take a slight loss on its required rate of return, barring the voluntary distribution of the dividend from the board of directors, on which we are not offered a seat. Both options make the investor and the investee in trouble. Time line also provides an insight into the progressive challenges the company is facing in the case study. There is no issue of equity for the new financier which eliminates the risk of loss of control over company. Risk and Risk Aversion 7.
The dividend and the autoconversion terms, however, are places in which we can demonstrate flexibility. Retirement Plan: Including provisions for the possible Social Security program end. Johnson and the First Analysis Corporation. I suggest a ratio of 1. Thus, in 1994, AccessLine diversified their financing to professional equity investors. With the domain knowledge in telecommunication, Apex concluded that this was an attractive investment.
Apart from investment opportunity the Access Line Company has many risks. This leads to unstructured learning process resulting in missed details and at worse wrong conclusions. This is justified, once again, by the fact that it will be difficult to have a competitive advantage after an extraordinary growth period. College Funding: Two children, ages 6 and 11 years old. The development of return estimates requires judgement; it is not simply a statistical or mathematical forecasting exercise. Usually, Apex sought to be the leading investor whatever the stage in order to have one of its representatives join the board of the financed companies. Why have they chosen this strategy? Apex, a chemical manufacturer, has the option of commercializing one of its compounds due to resource scarcity.
Note that this is only the case because we assume a successful scenario. Its timing is random and to a large degrees, unpredictable. This leads to either missing details or poor sentence structures. By investing at the proposed valuation, according to the proposed control and incentive structure, Apex would be shouldering a disproportionate share of the risk should Accessline fail to meet its performance targets, or require fresh inflows of capital from future investment rounds. Consumer products and specialty retail. Furthermore we assume the nominal growth rate to be equal to a conventional rate of 3%. The reason being is because capital investment functions to generate cash flows in years to come and also acts to uphold the profitability of existing business activities Watson and Head, 2007.
There are many types of firms with different efficiency levels and historical backgrounds. Normally this period is assumed to be between 3 and 7 years long. Finally, even though they have the ability to vote on the compensation package increase of any insider who holds 5% or more of the company stock, Series B holders do not have the right to elect one director to the Board. There are four phases of business cycle, such as prosperity phase, recession phase, depression phase, and recovery phase. Should Apex make a counter-offer, I would suggest the following terms: First and foremost, Apex must insist on the right to elect one director to the board. This is even more dramatic when considering that Mr.
The funds from Apex Investment Partners would serve beneficially for AccessLine because of their vast knowledge and experience in the industry. Step 10 - Critically Examine Apex Investment Partners B : May 1995 case study solution After refreshing your mind, read your case study solution critically. Apex is conveniently located in a small strip shopping center at the intersection of Randall Mill and Davis Street. Apex Learning ® and the Apex Learning Logo are registered trademarks of Apex Learning Inc. Such dividends may be converted, if the holder desires, to common shares. Basically, the concept is to assign one single number an AccessLine number which allows an individual to manage all of their different telecommunications. Apax took a well-designed strategy to bid for Xerium.
In a first step we have to postulate when the successful exit is going to happen. Business environments are often complex and require holistic solutions. It could be solved by the Access Line Management to reduce the per unit price which is acceptable to the Apex Investment………………. Realizing that it was less risky and far more costeffective to license their technology, the company extensively use strategic alliances with well-establish operators to commercialize its technology. Begin slowly - underline the details and sketch out the business case study description map. Johnson and the First Analysis Corporation.