Should owner sell outright or is there another solution

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Reference no: EM133982028

Assignment:

Scenario: A 30-year-old flower delivery company. The company is well run by the owner, but the owner is looking at possibilities for transitioning to retirement in next five years. Reason for Exit - The owner's husband is also close to retirement and therefore they are looking at opportunities to travel more in the near term. Should owner sell outright or is there another solution?

Questions

Evaluate the following exit strategies:

1. Harvest free cash flows (stop growing)

2. Liquidate the business (sell assets)

3. Sell the business as a going concern using the following valuation techniques:

1. Asset based approach (liquidation value, book value or replacement value)

2. Earnings based approach (capitalizing past earnings or discounting future earning) [assume a 16% capitalization rate]

3. Market value approach (comparable market price) Try to consider non-quantitative factors in evaluating the options (e.g. the market conditions, the competition, commitments, prices etc.) What do you recommend?

Reference no: EM133982028

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