Blackstone Case Summary

1. What is private-equity investing? Who participates in it and why? How is Palamon positioned in the industry?

Barb Williams and Rick Thomas, while attending an executive education course at a well-known business school, came across a case which involved calculating the cost of capital for Telus Corporation (Telus). Basic data such as the Balance Sheet, Income Statement, Data on Telus’ Common Stock, Market Index, and the Average Annual Returns in North American Capital Markets were provided. In order to calculate Telus’ cost of capital we need to calculate the company’s Cost of Equity, Cost of Debt, and Tax Rate along with their weighted cost and then apply these to the Weighted

Case 12-02 To Recognize or Not to Recognize, That Is the Question Shakespeare Inc. (“Shakespeare” or the “Company”) is a privately held book printing and publishing company with a December 31 year-end. The summary balance sheet as of December 31, 2010, included: Current assets Noncurrent assets Total assets Current liabilities Noncurrent liabilities Total liabilities Total shareholder equity $ 6,500,000 28,250,000 $34,750,000 $ 4,500,000 13,750,000 $18,250,000 $16,500,000

in our calculations, as this company exhibited dramatic value differences to others in the sample, (likely to skew our results and prove misleading). Using the average of the revised sample field for each ratio, we inserted Torrington’s values where appropriate to generate an entity value. The findings generated two values for Torrington, 606 million and 398 million. Taking the average of these two numbers, Torrington exhibited a relative value of 502.41 million. Because of the lack of related information given in the case, and the often large differences in measures amongst competitors, different capital structures, internal management strategies, there remained many unknowns in our model. We decided it would be best to use this valuation to reaffirm our assumptions in our DCF valuation. (Please see exhibits)

Like several companies, Nortel stipendiary their executives with stock choices (Collins, 2011). This compensation solely inspired the tendency to be but honest regarding the company’s finances. author closely-held stock choices that solely inspired his actions to fulfill or beat the benchmark set by analysts. If Nortel’s earnings showed to be higher than the benchmark, Nortel’s stock costs would rise creating the stock closely-held by management to be even a lot of valuable. By tweaking the books to indicate the road earnings price as critical the allowable accumulation price he created the stakeholders assume that the corporate was creating extra money than it had been. “Nortel ne'er incomprehensible a benchmark over the sixteen quarters (Collins, 2011).” it had been too tempting to bump the numbers up so the stocks gave the impression to be value over they were. “Nortel’s accounting practices junction rectifier to AN investigation by AN freelance review committee, that found that insubordination with accumulation and accounting fraud were undertaken to fulfill internally obligatory earnings targets (Collins, 2011).”

Wells Fargo Bank filed a lawsuit, in September 2014, against the accounting firm Worley Stroud & Associates PC claiming professional negligence. Wells Fargo accused Worley Stroud and two of its representatives of causing over $25 million worth of damages through their accounting errors. In March 2008, Wells Fargo agreed to make an asset-based loan to an agricultural commodity company, by the name of West Plains Co., where the amount of money lent would be dependent on the amount of assets the company held. However, Wells Fargo says that they lent $20 million more than they otherwise would have lent. Harry Worley and DeWitt Stroud of Worley Stroud & Associates PC were responsible for auditing West Plains’ financial statements from at least

KARDAR LLC’s main concerns will be aggressive cost management, in particular with the purchase of properties in need of renovation prior to being offer for sale or rental. The Company will ensure all contractors and staff retain the required licenses to perform the services offered. The Company will exercise proper purchasing of office expenses and service needed for transaction preparations, and financial agreements to generate profit.

In November 2013, JPMorgan was involved in a law suit scandal with the department of justice and agreed on a $13bn civil settlement for assuming responsibility of toxic mortgage lending practices.

“On August 9, 2014 at 11:51 a.m., a 9-1-1 call from a convenience store alerted police about a robbery, in progress. CCTV had pictures of Michael Brown as the suspect of the robbery. At 11:52 a.m., a suspect was spotted near petrol station. At 12:00 p.m. officer Darren Wilson responds to call and leaves a nearby home where he had been responding to an emergency call about a sick child. At 12:01 p.m. officer Wilson encounters Michael Brown, but not in regards to the robbery, but to walking down the middle of the street stopping traffic. At 12:01-12:04 p.m. Michael Brown shot dead, details unknown” (BBC News).

In recent news Wells Fargo bank has been under a lot of scrutiny regarding unethical business practice. Wells Fargo & Company, is one of the nation's largest financial banking service company that provides

Description: The U.S. Supreme Court denied a request from Google to hear a case in which it was accused of infringing Oracle copyrights by using Java in its Android mobile operating system.

The yearly shareholder equity increase suggest the organization was holding onto their profits for future business operations, but in 2016, shareholder equity decreased following a reduction in the firm’s assets (Motley Fool, n.d.). Lastly, the statement of cash flow shows net income volatility for NBL during these five years. The most distinct change in net income occurred between 2014 and 2015, where net income dropped from $1,214 to $(2,441) (Noble Energy Inc., 2017a). Though NBL still recorded a negative net income in 2016, this loss was an improvement from previous year. Due to the fact shareholder compensation correlates to a company’s net income, Nobles net income loss indicates that future dividend payouts will be negatively affected (InvestingAnswers, n.d.). As a result, the industry downturn is evident in Noble Energy’s financial performance in 2015 and

The dividends to Kennecott equal to the difference between Carborundum’s net income after adjustment and the profit retention. The methodology Kennecott’s management team used to determine the value of Carborundum to Kennecott was evaluated using an incorrect set of cash flows. First, it subtracted out the profit retention requirements needed to support Carborundum’s growth even though Kennecott would own the full equity in Carborundum, which is incorrect. Second, depending on the method used to value the company, the relevant set of cash flow is needed to be determined, either the free cash flow to the firm or the free cash flow to equity.

An initial public offering (IPO) is the process through which a privately held company issues shares of stock to the public for the first time. Also known as "going public," an IPO transforms a small business from a privately owned and operated entity into one that is owned by public stockholders. An IPO is a significant stage in the growth of many small businesses, as it provides them with access to the public capital market and also increases their credibility and exposure. Becoming a public entity involves significant changes for a small business, though, including a loss of flexibility and control for management. In many cases, however, an IPO may be the only means left of financing growth and expansion. The decision to go public is

The greatest burden of private value financing is the noteworthy loss of control inside of the organization. Relatively greater financial speculators are strong to the point that they begin to control the general operation of the organization for the sake of expanding organization riches. There are