Analyze the structure of the equity proposal

Assignment Help Financial Management

Reference no: EM132021692

Expanding Gregory’s – Greg and John has owned Gregory’s Greek Restaurant for over thirty years. The restaurant overlooks a river and offers visitors a lovely view of the countryside. Over the years, the restaurant’s popularity has grown through word-of-mouth advertising, and now guest often wait up to two hours on the weekend before being seated. Greg and John have been approached by Capstone Developers, which wants to use the Gregory’s Greek Restaurant concept in a mixed-use development it is putting together. It seems that one of Capstone’s managers ate at Gregory’s and loved the concept. Capstone Developers put together an investment proposal for Greg and Andy requesting to use their concept and cash equity for the deal.

The following are excerpts from the offer:

· Use of the Gregory Greek Restaurant name in exchange for limited partnership units in the new restaurant.

· A request for a 45% equity investment from Greg and John on the total project cost of $3,000,000. In return for their investment, they will receive 25% ownership and 25% of all cash flows, with Capstone reserving 75%.

· With an estimated $175,000 in cash flows in Year 1 and a 10% growth rate over the next decade, the return on equity looks very promising.

· Capstone Developers, as the general partner, will retain all operating rights, including the right to decide when the restaurant and property will be sold.

Analyze the structure of the equity proposal. If you were Greg and John, would you accept this offer as it stands? If not, what would you negotiate?

Reference no: EM132021692

Questions Cloud

We are studying aggregate demand and aggregate supply : We are studying Aggregate Demand and Aggregate Supply, I need help with the below.

Subsidies require tax revenue : Rather than generating tax revenue as do tariffs, subsidies require tax revenue.

Appropriately reflected in the required return of the bonds : Assume that five years later the inflation premium is only 3 percent and is appropriately reflected in the required return (or yield to maturity) of the bonds.

Boost of energy from energyshot : What effect an advertising campaign touting how "the boost of energy from Energyshot will last the whole day!", will impact these lesser developed countries.

Analyze the structure of the equity proposal : Analyze the structure of the equity proposal. If you were Greg and John, would you accept this offer as it stands?

Market for factors of production or the market : Identify whether each of the following events in this scenario occurs in the market for factors of production or the market for goods and services.

Create an erd for a database using these business rules : Create an ERD for a database using these business rules for the Happy Skies Airlines.Create this ERD and take a screenshot.

Compute the expected dollar rate of return : Fill in the blanks in the following statements to compute the expected dollar rate of return on the euro deposit:

At what price would it sell without the call feature : At what price would it sell without the call feature? At what price should an Alpha bond sell?

User Account

All Pages