Midterm Exam

1044 Words Jul 3rd, 2013 5 Pages
Midterm Instructions: Answer each question below in essay form, based on the principles and cases that we have reviewed so far this semester (i.e., Recognizing the Opportunity, Marshalling Resources).

No. 1: Evaluate John Taylor and Marty Grayson’s effort to identify the opportunity. Are they the right people for this opportunity? Why or why not?

John Taylor and Marty Grayson had both always had the interest of being entrepreneurs and when they met eachother is when their search for a venture began. They only had a few criteria in deciding on what kind of company that they wanted to buy. The first criteria was that the business must have a high gross margin to allow from maximum benefits from building sales. They decided it
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With an earnings in the most recent year of $644,000 it appears that the company is going to be able to cover these costs as long as they continue to grow and reduce the costs. After all of this we also need to keep in mind the financing deals that they have made with the Patricorp Group of $312,500 In for 41% of the equity, and $625,000 in subordinate debt. That was the previous debt that I talked about in the previous paragraph. As of the current revenues of the company, and considering the actual payments needed to pay they need to continue to grow the company to keep up and service the debt they will inquire. It is critical that they are successful with the growth, so that they do not fault on their agreement and have to give up more equity in the company so that they can retain ownership.

No. 4: Would you pull the trigger on this deal? Why or why not?

Yes I would pull the trigger on this deal for the company. The first reason is because this opportunity meets all of their prerequisites that they wanted in a venture, and more. There are only 7 competitors when it comes to the industry and they already have 15% of the market share from a company that was beign run by two dysfunctional partners that were in their 60s. If they take an aggressive market strategy and bring in someone who has extensive knowledge of the industry, they can keep growing their share of

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