Essay on Spring 2014 GWU MBAD 6211 HC Case: Colonial Back Crackers

1282 Words Apr 24th, 2014 6 Pages
Spring 2014 GWU MBAD 6211 HC Case: Colonial Back Crackers Colonial Back Crackers is a small physical therapy practice in the Washington DC area. Colonial has been in business for several years focusing on providing PT services and products. George, a GWU MBA grad, founded and continues to run the business.

For various reasons including new entrants in the PT space and margin compression from reduced payments from insurance
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Buff paid cash of $3,025,000 for all of Colonial’s assets and debts and began the integration process.

As part of the purchase, Buff was able to use its size to renegotiate the rate of the 6% 3 year $1,200,000 loan down to 4% and extend its term 4 years with interest and principal payable in 4 year-­‐end equal payments.

Buff’s resulting balance sheet as of September 1st, at the end of loan negotiations, integration, and new inventory policy is shown below. Assume that both loans began as of September 1st so no interest needs to be calculated during the startup period from June 30th to Sept 1st.

Balance sheet items

Book Value after Combining Operations

Cash

10,000,000

Accounts receivable

0

Inventory

0

Equipment

2,550,000

Buildings

3,000,000

Land

450,000

Colonial Good Will

250,000
Total assets

Accounts payable
Notes payable (details below)
$0.01 par value Common stock (1M shares)

16,250,000
375,000
9,000,000
10,000

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