Case | HBS Case Collection | July 2012

Owen's Precision Machining

by Ramana Nanda and James McQuade

Abstract

For the second time in fourteen months, Christopher Owen, the second-generation owner of Owen's Precision Machining (OPM), found himself running out of cash. Owen wondered what he was doing wrong. How much additional money would he need to raise to get OPM through the next twelve months, and what could he change now to fix his company for the long term? Owen's thoughts also turned to the conversation he had last month with two Harvard Business School alumni who were searching for a manufacturing business to acquire after spending the early part of their career in manufacturing at GE's Aircraft Engine division in Lynn, MA. Their offer of $1.1 million, or 6.9x times 2011 EBITDA of $159,292, was a pleasant surprise, but Owen was not interested in getting out of his family's business. Given the current cash flow situation, should Owen reconsider the acquisition offer?

Keywords: Family Business; Cash Flow; Mergers and Acquisitions; Decision Making; Problems and Challenges; Business Strategy; Corporate Finance; Manufacturing Industry; Massachusetts;

Citation:

Nanda, Ramana, and James McQuade. "Owen's Precision Machining." Harvard Business School Case 813-036, July 2012.