MEMORANDUM
To Apex Investment Partners:
According to my analysis of the Accessline’s proposed term sheet, I do not believe that Apex would serve its own interests, or those of its investing partners, by investing in Accessline according to the terms proposed. By investing at the proposed valuation, according to the proposed control and incentive structure, Apex would be shouldering a disproportionate share of the risk should Accessline fail to meet its performance targets, or require fresh inflows of capital from future investment rounds. Nor can Accessline take the sort of steps necessary to protect its investment in the case of management failure.
Should Apex make a counter-offer, I would suggest the following terms:
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First and foremost, Apex must insist on the right to elect one director to the board. Series A investors already have one seat, and the current voting clauses allow Series A to effectively retain control of decision making by requiring 2/3rds majority for many key decisions. Should future funding rounds be required, those investors may insist on seats on the board.
Apex must remove antidilution protection from employee shares, as this removes a significant incentive for employees and management to reduce Accessline’s burn rate. However, as Series A investors retain a veto over the deal, their shares must be allowed to retain anti-dilution protection. Additionally, we may propose a point at which additional investment rounds (above and beyond $32m of fresh capital) would cause dilution of ESOP shares at an accelerated rate.
Dividends should be made cumulative and issuable upon a liquidation event or an IPO. Such dividends may be converted, if the holder desires, to common shares. This will encourage management to seek a quicker exit.
Liquidation preference must be strengthened in other ways. In my opinion, the current arrangement allows management and employees to receive unjustified returns in the case of a liquidation. I suggest a ratio of 1.5 times the Series B purchase price, applicable to Series A shares, with the remainder to be
A unique part of the ACM strategy was the need for unanimous firm agreement upon the industry or market before individual companies were considered for investment. This was based on the premise of top down analysis, meaning that only when market or industry based analysis showed potential for a discontinuity based investment would further research be conducted to find viable target companies. In addition, the inclusion of a Discontinuity Roundtable, consisting of twenty industry experts and observers that periodically met with the ACM partners to identify and discuss market discontinuities, provides a comprehensive and systematic approach to identifying investment opportunities in the market, and makes ACM more attractive as an investment partner.
In April 2000, Ford Motor Co. announced a shareholder Value Enhancement Plan (VEP) to significantly recapitalize the firm's ownership structure. Ford had accumulated $23 billion in cash reserves and under the VEP would return as much as $10 billion of this cash to shareholders. In exchange for each share currently held, the plan would give stockholders one new share plus the choice of receiving $20 in either cash or additional new Ford common shares. Shareholders electing to receive cash would be taxed on these distributions at capital gain rates. Among other things, the plan provided a means for the Ford family to obtain liquidity without having to dilute their 40% voting interest (even though they own
High valuation: AccessLine’s management requires pricing at a premium to the valuation in the prior financing round. But there was a relatively high valuation in its initial external financing round already. Too high valuation limit fund’s upside.
Portfolio management is an important factor that determines the performance of the portfolio. To perform well in the portfolio, it is not only essential to develop personal investment strategies, but analyzing current financial trend is also vital. Stock Trak is an online portfolio simulation that allows students to try out different investment strategies, and also get a hand on experience in what the real market trading conditions are. By managing the portfolio, I have acquired some new knowledge of investment strategies and also become more familiar with the current market by following closely to the financial headlines.
* From the statement of AirThread case, we know that American Cable Communication want to raise capital by Leveraged Buyout (LBO) approach. This means ACC will finance money though equity and debt to buy AirThread and pay the debt by the cash flows or assets of AirThread.
5. What capital structure would you recommend as appropriate for AHP? Are there any other sources of value, (other than the tax benefits), to AHP’s shareholders from a leverage increase? What are the disadvantages of leveraging this company?
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Key Issue 2: Is $1b appropriate to enhance UST’s firm value and ultimately shareholder value?
A firm may preempt the expansion of competitive firms by using an expansionist capacity strategy and announcing a large capacity expansion.
Although both of these two methods have the similar function in adjusting the capital structure, VEP has its advantages in terms of less limitation and higher efficiency. According to SEC rules, Ford’s maximum repurchase volume from open market was 2.075 million per day in 2000, which means Ford has to spend at least 103 days to conduct the share repurchases with the total $10 bil-lion cash. The implementation of VEP significantly reduce the time cost in the repurchase process. Moreover, since VEP provided the same deal to all the shareholders, it saved the time and funds spent in the negotiation and premium prices offering.
What is the analogous for-profit statement called? What are the main sections of the statement of operations?
Within this case analysis, we will examine Autozone's stock repurchasing program, as well as the mechanics behind it and the benefits it provides to the firm. Additionally, this report will analyze the alternative operating cash flow options Autozone should consider, detailing the benefits and costs of each option. A comprehensive examination of these operating cash flow alternatives will be presented, allowing for the determination of the most viable alternative for the use of Autozone's operating cash flows.
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Summit Partners proposes to FleetCor Technologies (later preferred as “FleetCor” or the “Company”) an investment into FleetCor for the total amount of $44.9 million in return for a post transaction ownership of 54.2% in the “Company” and coming down to 46% ownership in the company after newly created stock options for management equivalent to 15% ownership in the company has been completely executed and fully diluted. This investment is in the form of convertible preferred stock with an 8% accrued interest, compounding annually. As the transaction come through, Summit’s prefer stock will be treated equal-footing in