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CMI's Acquisition of Corporate Transfer Services

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Define the issues and define how bargaining should progress, including the parties' various objectives. CMI was a wholly owned subsidiary of Northwest Equipment Corporation, a major freight transporter and lessor of railcars, commercial aircraft, and other industrial equipment and was a reputedly successful company particularly since Merrill Lynch had voiced interest in it and it had won the interest of Metropolitan Realty Network, a national association of independent real estate brokers (otherwise called MetroNet). Their acquaintance with MetroNet brought them into negotiations with Corporate Transfer Services, Inc. (CTS) that offered itself as acquisition to CMI. Discouraging facts were the following: The company had been founded in 1975; it had barely achieved a break-even profit level. Apparently, the company had made promises to MetroNet about developing a nationwide, well-financed, fully competitive organization. To date, however, those promises were largely unfulfilled. Osgood, executive of MetroNet, believed that CTS's shortage of equity and, therefore, borrowing capacity, had severely limited its growth potential. All in all, the company had a net worth of only $420,000. Much of this was from its stockholders: Three of the four stockholders (Elliott Burr, William Lehman, and Michael Kupchak) had invested an additional $2 million in the company $1.3 million in short-term notes and $700,000 in bank loans that they had personally guaranteed. Moreover, while

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