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Dollar General Case Essay

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There can be a number of reasons for a company to go public or private. There are benefits, as well as disadvantages that go along with either course of action (Exhibit 1 for details). When firms decide to go private, they are no longer listed on any stock exchange market. The pressure of keeping accounting regularity and reporting to the public is no longer an issue. Instead, firms can be more flexible to reorganize the business profile as well as the management team. In many cases, shareholders and board members receive very rewarding financial benefits from this transaction. However, in some situations, public firms do not have a choice in the matter, as is the case in a “hostile takeover”.
In assessing Dollar General’s performance,
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| Company may cease to exist, if the new owner bankrupts it and uses the assets.No more prestige of being listed on the stock exchangeDifferent financial and investment algorithms. | For the comparison a reversed process is given | Private company going public | Stocks are a liquid asset, easy to buy and sell. High profits it stocks go up | Higher wages and bonuses, Prestige of running a public company. | Growth potential, ability to attract public funds. Access to the public funds | Risks, the stock price may go down | More “paperwork” and responsibilities, business processes could be subject to more control and adjustment. | The risks of becoming a victim of hostile acquisition and stocks speculations, causing problems with financing. |

Exhibit 2
The following markers could be used to measure DG performance: Profit margin, ROA, ROE, EBIDTA. To tackle company’s specific problems and estimate proposed solutions: inventory turnover, days in inventory and Sales/Employee.
The most important is Enterprise value/EBIDTA. Helps to estimate the offer of KKR, inc and gives the answer to Question N4. (See the following table)
DG experienced difficulties with inventories and real estate portfolio, due to its size and nature of business, however it recognized the problem, implemented the effective and adequate steps towards it resolution (some of these steps are made the results better than of competitors, see days
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