Do you agree with the bonneau decision to sell

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Reference no: EM132264694

Ed and Barbara Bonneau started their wholesale sunglass distribution firm 30 years ago with $1,000 of their own money and $5,000 borrowed from a banker in Ed's hometown. The firm grew quickly, selling sunglasses and reading glasses to such companies as Walmart, Eckerd Drugs, and Phar-Mor.

Although the company had done well, the market had matured recently and profit margins narrowed significantly. Walmart, for example, was insisting on better terms, which meant significantly lower profits for the Bonneaus. Previously, Ed had set the prices that he needed to make good return on his investment. Now, the buyers had consolidated, and they had the power. Ed didn’t enjoy running the company as much as he had in past, and he was finding greater pleasure in other activities, such as serving on a local hospital board and being actively involved in church activities.

Just as Ed and Barbara began to think about selling the company, they were contacted by a financial buyer, who wanted to use their firm as a platform and then buy up several sunglass companies. After negotiations, the Bonneaus sold their firm for about $20 million. In addition, Ed received a retainer fee for serving as a consultant to a buyer. Also, the Bonneaus’ son-in-low, who was part of the company’s management team, was named the new chief operating officer.

Please respond to the following questions:

1. Do you agree with the Bonneau's decision to sell? Why or why not?

2. Why did the buyer's retain Ed as a consultant?

3. Do you see any problem with having the Bonneau's son-in-law become the new chief operating officer?

Reference no: EM132264694

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