William E. Fruhan

George E. Bates Professor, Emeritus

Professor WILLIAM E. FRUHAN, JR. is George E. Bates Professor, Emeritus at the Harvard Business School. He received his BS degree from Yale University, and his MBA and DBA degrees from Harvard University.  He has served as Senior Associate Dean and Director of Faculty Development;  Chairman of the Executive Education Advanced Management Program; Chairman of the Finance Area at the School; and as course head for Finance in the first year of the MBA Program.

Professor Fruhan is the author of Revitalizing Businesses; Financial Strategy; and The Fight for Competitive Advantage. He is co-editor of Case Problems in Finance (6th through 11th editions). His articles include "Corporate Raiders: Head'em Off at Value Gap;" "Management, Labor and the Golden Goose;" "How Fast Should Your Company Grow?;" "Is Your Stock Worth Its Market Price" (with T. R. Piper), all in the Harvard Business Review; and "Levitz Furniture: A Case History in the Creation and Destruction of Shareholder Value," Financial Analysts Journal.  He has written over 140 cases and teaching notes for use in business School classrooms around the world.

At various times Prof. Fruhan has served as a director of 15 different corporations. Six were firms with publicly traded stock and nine were privately owned. Professor Fruhan is one of the early developers of the concept of value based management, and currently conducts his research in developing business level and corporate strategies aimed at enhancing shareholder value.

Books

Journal Articles

Cases and Teaching Materials

  1. Landmark Facility Solutions

    Landmark Facility Solutions presents a situation in which a medium-sized facility management company assesses whether to acquire a larger facility management company that is known for its high-quality services and technical expertise. The acquirer believes the acquisition will help it to become an integrated facility manager and enter new industries in its home market. The case focuses on valuing the acquisition opportunity and choosing the right financing for the transaction. It explores the interaction between corporate investment and financing and sets the stage for discussions about capital structure decisions. The case can be used in first-year MBA courses in corporate finance and financial strategy or second-year MBA courses in mergers and acquisitions and advanced corporate finance. It also can be used in an undergraduate finance course that covers mergers and acquisitions.

    Citation:

    Fruhan, William, and Wei Wang. "Landmark Facility Solutions." Harvard Business School Brief Case 915-527, September 2014. View Details
  2. Thompson Asset Management

    Thompson Asset Management (TAM) is a small investment advisory and asset management firm in Jacksonville, Florida, with about $100 million in assets under management in two different funds. Since starting the firm in 2009, the CEO and founder Allison Thompson has had a proven track record of beating benchmarks and managing the portfolio's downside risk. The firm's typical clients were high-net-worth individuals, and in 2014, Thompson is looking to expand her business by taking on institutional clients as well. She recently met with the investment officer of her alma mater and is considering taking on the university's endowment fund as a client. For her bid to manage the entire endowment of $20 million, Thompson must create a presentation that outlines her investment strategy. The case is ideal for an MBA-level or undergraduate finance course that covers asset management and/or portfolio theory.

    Citation:

    Fruhan, William, and John Banko. "Thompson Asset Management." Harvard Business School Brief Case 914-565, July 2014. View Details
  3. Newfield Energy

    In September 2013, Miles Griffin, CEO and chairman of the board of Newfield Energy, prepares to present financial proposals to the board of directors for approval. Newfield (based in Houston, Texas) was a large independent energy company primarily engaged in the exploration, development, and production of crude oil, natural gas, and natural gas liquids. It had experienced declines in earnings and cash flows in recent years because of the decline of natural gas prices and asset write-downs. The proposals to the board, prepared by the CFO, included (1) a press release outlining that the company was planning to divest several natural gas projects immediately, probably at significant book losses; (2) a significant reduction of common stock dividends; and (3) an exchange offer under which the company would exchange up to 20% of its common stocks into newly issued preferred stocks. Griffin was concerned that the breadth and complexity of the proposals might cause investors to worry. This case is ideal for use in first- or second-year MBA courses in corporate finance or capital markets or in a finance course for advanced undergraduates.

    Citation:

    Fruhan, William E., and Wei Wang. "Newfield Energy." Harvard Business School Brief Case 914-541, January 2014. View Details
  4. Larry Steffen: Valuing Stock Options in a Compensation Package

    New MBA graduate Larry Steffen has accepted an attractive job offer from Athena Global Technology but must now choose one of two alternative compensation plans. The first compensation plan option includes a base salary plus a $25,000 cash bonus, and the second includes the same base salary plus employee stock options. In order to evaluate and decide on one of these plans, Larry must estimate the value of the offered stock options and consider several complicating factors, including whether he will remain at Athena for the five-year vesting period necessary to receive the options. This case introduces students to option valuation and facilitates a discussion about the effectiveness and potential benefits and problems associated with the use of stock options in compensation packages.

    Citation:

    Fruhan, William E., and Craig Stephenson. "Larry Steffen: Valuing Stock Options in a Compensation Package." Harvard Business School Brief Case 914-517, November 2013. View Details
  5. Jackson Automotive Systems

    Jackson Automotive Systems produces automotive parts for advanced heating and air conditioning systems, engine cooling systems, fuel injection and transfer systems, and various other engine parts and it supplies them to the automotive industry primarily in Michigan. Like many OEM suppliers for the automotive industry, Jackson cut back production following the financial crisis in 2008. By 2013, the firm is back to operating at capacity. The company experiences a bottleneck in production of some key electronic components and, as a result, is unable to repay its outstanding debt to the bank. In addition, the firm delayed replacing equipment during the downturn and now must replace aging equipment to avoid future production delays. The president approaches the bank for an extension to repay a loan and for an additional loan to cover the new equipment purchase. Before meeting with the loan committee, the president must prepare a presentation on the firm's financial position.

    Keywords: Production; Financial Crisis; Corporate Finance; Manufacturing Industry; Auto Industry; Michigan;

    Citation:

    Fruhan, William E., and Wei Wang. "Jackson Automotive Systems." Harvard Business School Brief Case 914-505, July 2013. View Details
  6. Sterling Household Products Company

    Sterling Household Products manufactures and markets a broad line of consumer goods from laundry soap and cosmetics to cleaning, disinfecting, and sanitizing products. The company has many highly regarded brand names and consistently reports impressive sales and profits to the investment community. Despite a record of success, a deeper analysis of financial measures reveals that growth rates for unit volumes, sales, and profits are low. Looking to expand into new markets with strong growth potential, the company considers acquiring the germicidal, sanitation, and antiseptic product unit from Montagne Medical Instruments, a company in the health care industry. This acquisition seems like a natural extension of Sterling's experience and expertise in the market for household cleaning supplies. Both parties reach a tentative agreement on price and Sterling considers whether the proposed investment adds value given the risks involved. Students must perform a comprehensive investment analysis and examine both the qualitative and quantitative issues associated with evaluating a strategic acquisition before making a final recommendation.

    Citation:

    Fruhan, William E., and Craig Stephenson. "Sterling Household Products Company." Harvard Business School Brief Case 913-556, April 2013. View Details
  7. New Earth Mining, Inc.

    New Earth Mining is one of the largest producers of precious metals in the U.S. While the firm operates mines primarily in the U.S. and Canada, it has also made substantial investments in gold exploration projects in Australia and Chile. New Earth has been very successful and has a large amount of cash on the balance sheet, a simple debt structure, and a reasonable leverage ratio with no risk of liquidity. With a strong financial position, the firm considers reducing its dependence on precious metals by diversifying into base metals and other minerals. An investment opportunity for mining iron ore in South Africa looks promising but still carries substantial risk. A high risk of civil war in neighboring countries along with strong fears that the South African government will nationalize mining operations combine to create an unstable political environment. The tentative financing package is complex and creates challenges for determining a value for the project. Students must complete a quantitative analysis of 4 proposals with different valuation methods before making a final recommendation.

    Keywords: South Africa; capital budgeting; international business; valuation; Return on investment; risk management; mining; Risk and Uncertainty; Risk Management; Valuation; Investment; Diversification; Mining Industry; Australia; South Africa; Chile; Canada; United States;

    Citation:

    Fruhan, William E., and Wei Wang. "New Earth Mining, Inc." Harvard Business School Brief Case 913-548, February 2013. View Details
  8. The Company Sale Process

    Lays out the steps, the timeline, and the process by which a company is sold. Focuses on the sale of companies with enterprise values greater than $100 million. These transactions are large enough to require the help of a financial adviser and attract both strategic and financial bidders. The sale process described is that of a private auction, including a confidential information memorandum and a "roadshow" to sell the high-yield debt needed to fund the transaction. Covers issues such as identifying and attracting bidders; dealing with the concerns of the managers of the selling company; negotiating issues in a definitive merger agreement; and post-sale issues.

    Keywords: Mergers and Acquisitions; Auctions; Bids and Bidding; Agreements and Arrangements; Sales;

    Citation:

    Fruhan, William E., Jr. "The Company Sale Process." Harvard Business School Background Note 206-108, April 2006. (Revised April 2012.) View Details
  9. The Role of Private Equity Firms in Merger and Acquisition Transactions

    Explores the importance of private equity firms in merger and acquisitions activity around the globe. In many countries, these firms now account for one quarter of the total merger and acquisition activity of all firms. The larger private equity firms generate fees for investment banking firms that exceed $350 million per year. Shows how the general partners of the fund financing the acquisition; the limited partners of the fund financing the acquisition; and the management team running the acquired firm for the private equity sponsor share the shareholder value creation in a successful leveraged buyout sponsored by a private equity firm.

    Keywords: Leveraged Buyouts; Mergers and Acquisitions; Private Equity; Investment Funds; Value Creation;

    Citation:

    Fruhan, William E., Jr. "The Role of Private Equity Firms in Merger and Acquisition Transactions." Harvard Business School Background Note 206-101, April 2006. (Revised April 2012.) View Details
  10. Braddock Industries, Inc.

    This case examines the drivers of economic value creation for shareholders, and how these drivers are reflected in various incentive compensation programs for management. The case also looks at how the economic performance of business units can be evaluated using measures of economic value creation.

    Keywords: Business Units; Investment; Executive Compensation; Measurement and Metrics; Performance Evaluation; Business and Shareholder Relations; Motivation and Incentives; Value Creation;

    Citation:

    Fruhan, William E. "Braddock Industries, Inc." Harvard Business School Case 211-061, February 2011. (Revised April 2012.) View Details
  11. Braddock Industries, Inc. (TN)

    Teaching Note for 211061.

    Keywords: Value Creation; Business and Shareholder Relations; Motivation and Incentives; Compensation and Benefits; Economics; Business Units; Performance Evaluation;

    Citation:

    Fruhan, William E. "Braddock Industries, Inc. (TN)." Harvard Business School Teaching Note 211-069, February 2011. (Revised April 2012.) View Details
  12. Pacific Grove Spice Company

    Pacific Grove Spice Company is a profitable, rapidly growing manufacturer, marketer, and distributor of quality spices and seasonings. The company's business model requires significant investment in accounts receivable, inventory, and fixed assets to support sales. Although the company is profitable and all of its net income is reinvested in the firm, the firm must utilize significant amounts of debt to fund the necessary growth in assets to support sales. The bank is concerned about the total amount of interest-bearing debt on Pacific's balance sheet and has asked the company to provide a plan to reduce it. Debra Peterson, president and CEO, believes the current four-year financial projections are reasonable and attainable. She is also considering three opportunities: sponsoring a cable cooking show, raising new capital by selling shares of common stock, and acquiring a privately owned spice company. Students must analyze the company's financial projections to determine if the reduction in debt meets the bank's requirements. They must also analyze the opportunities and consider their individual and combined impacts on the company's financial position. The case illustrates the interaction between investment and financing decisions. This multifaceted case can be taught in a single class session or extended over several sessions and can be used as a final exam for an introductory MBA-level Finance course.

    Keywords: capital budgeting; Capital expenditures; Investments; Acquisitions; Securities analysis; valuation; Debt Securities; Opportunities; Cost of Capital; Valuation; Investment; Capital Budgeting; Business Model; Cash Flow; Financing and Loans; Acquisition; Retail Industry; Food and Beverage Industry;

    Citation:

    Fruhan, William E., and Craig Stephenson. "Pacific Grove Spice Company." Harvard Business School Brief Case 114-366, November 2011. View Details
  13. Note: Credit Rating Agencies

    The note examines the role of credit rating agencies in capital markets, with emphasis on the role of these agencies in the recent credit crisis and recommendations for change.

    Keywords: Financial Crisis; Capital Markets; Credit; Governing Rules, Regulations, and Reforms; Standards;

    Citation:

    Fruhan, William E. "Note: Credit Rating Agencies." Harvard Business School Background Note 209-056, September 2008. (Revised September 2011.) View Details
  14. Nike Inc. - Heading Toward 2012

    This is a short case (2 pages), which can be distributed and discussed in class as an update through 2006 of the Nike case series. It follows Nike, Inc.: Entering the Millennium (Case #299-084).

    Keywords: Business History; Brands and Branding; Apparel and Accessories Industry; Retail Industry;

    Citation:

    Fruhan, William E., Jr. "Nike Inc. - Heading Toward 2012." Harvard Business School Case 207-105, March 2007. (Revised July 2011.) View Details
  15. Note: Fair Value Accounting for Investments in Debt Securities

    The note describes how fair value accounting applies to debt securities that are classified by financial institutions as (1) "trading" securities, (2) "available for sale" securities, or (3) "hold to maturity" securities. It explains the hierarchy for inputs used in valuing Level 1, Level 2, and Level 3 financial assets. Finally, it notes the percentage of assets held by four types of financial institutions that are (a) accounted for at "fair value," (b) the hierarchical categorization of the assets, and (c) the percentage of assets held by each institution category where changes in the fair market value affect that institution's reported income.

    Keywords: Fair Value Accounting; Financial Reporting; Assets; Debt Securities; Investment;

    Citation:

    Fruhan, William E. "Note: Fair Value Accounting for Investments in Debt Securities." Harvard Business School Background Note 209-134, March 2009. (Revised February 2011.) View Details
  16. Stanley Black & Decker, Inc.

    This case allows instructors to explore shareholder value creation and transfer opportunities in merger and acquisition transactions. It also invites an examination of corporate governance issues surrounding CEO compensation. This case is quite brief (a total of 4 pages) so the balance between thinking time and reading set-up time for students is quite attractive.

    Keywords: Mergers and Acquisitions; Corporate Governance; Executive Compensation; Business and Shareholder Relations; Value Creation;

    Citation:

    Fruhan, William E. "Stanley Black & Decker, Inc." Harvard Business School Case 211-067, February 2011. View Details
  17. Flash Memory, Inc.

    The CFO of Flash Memory, Inc. prepares the company's investing and financing plans for the next three years. Flash Memory is a small firm that specializes in the design and manufacture of solid state drives (SSDs) and memory modules for the computer and electronics industries. The company invests aggressively in research and development of new products to stay ahead of the competition. Increased working capital requirements force the CFO to consider alternatives for additional financing. In addition, he must also consider an investment opportunity in a new product line that has the potential to be extremely profitable. Students must prepare financial forecasts, calculate the weighted average cost of capital (WACC), estimate cash flows, and evaluate financing alternatives. This case is especially recommended as a final exam case for a standard MBA-level course in corporate finance.

    Keywords: Cash flow; Forecasting; capital budgeting; Financial Management; Cash Flow; Forecasting and Prediction; Capital Budgeting; Computer Industry; Electronics Industry; United States;

    Citation:

    Fruhan, William E., and Craig Stephenson. "Flash Memory, Inc." Harvard Business School Brief Case 104-230, August 2010. View Details
  18. Flash Memory, Inc., Faculty Spreadsheet Supplement (Brief Case)

    Keywords: Cash flow; Forecasting; capital budgeting; Cash Flow; Forecasting and Prediction; Capital Budgeting;

    Citation:

    Fruhan,, William E., Jr., and Craig Stephenson. "Flash Memory, Inc., Faculty Spreadsheet Supplement (Brief Case)." Harvard Business School Spreadsheet Supplement 104-234, August 2010. View Details
  19. State Street Corporation

    To maximize their effectiveness, color cases should be printed in color. State Street Corp. reports a 13% gain in EPS in 2008 amidst a global financial crisis. The stock price declines 59% on the day of the earnings report. This one day decline was exceeded in the prior 12 month period by only one non-bankrupt S&P 500 company. That company was AIG, Inc. which declined 61 % on the day Lehman Brothers declared bankruptcy. While State Street reported $5.0 billion in profits over the 4-year period 2005-2008, the company also sustained $10.0 billion in after tax mark-to-market losses on its "available for sale" investment portfolio and the investment portfolios of its conduits. The question is, how has the firm performed over the past four years? Has it earned $5.0 billion or lost $5.0 billion? Fair value accounting plays a key role in the dilemma. How should a financial services firm measure and report income in the face of disorderly and illiquid markets for its principal assets? The case also examines how management at State Street responded to the deterioration in its capital ratios generated by "fair value" accounting.

    Keywords: Fair Value Accounting; Financial Reporting; Financial Crisis; Financial Liquidity; Financial Markets; Crisis Management; Financial Services Industry;

    Citation:

    Fruhan, William E. "State Street Corporation." Harvard Business School Case 209-112, March 2009. (Revised July 2010.) View Details
  20. Restructuring Distressed Companies -- Cross-National Comparisons

    This note describes briefly bankruptcy regimes and out of court restructuring in 5 countries, the U.S., the U.K., Germany, France and Japan.

    Keywords: Restructuring; Insolvency and Bankruptcy; Cross-Cultural and Cross-Border Issues; Laws and Statutes;

    Citation:

    Fruhan, William E. "Restructuring Distressed Companies -- Cross-National Comparisons." Harvard Business School Background Note 209-111, April 2009. (Revised March 2010.) View Details
  21. Saginaw Parts Co. and the General Motors Corp. Credit Default Swap

    This two-page case demonstrates how to unbundle the cost of credit extensions from product prices by observing the price of a credit default swap. It also explores how credit default swaps work, and how trade creditors are treated under U.S. bankruptcy law. Finally it provides a quick overview of the bankruptcy of General Motors Corp.

    Keywords: Trade; Credit; Insolvency and Bankruptcy; Credit Derivatives and Swaps; Laws and Statutes; Risk Management; Auto Industry; United States;

    Citation:

    Fruhan, William E. "Saginaw Parts Co. and the General Motors Corp. Credit Default Swap." Harvard Business School Case 210-056, February 2010. View Details
  22. The Case of the Unidentified Industries - 2006

    Helps students to understand how the characteristics of a business are reflected in its financial statements.

    Keywords: Financial Statements; Business Ventures; Forecasting and Prediction; Financial Management;

    Citation:

    Fruhan, William E., Jr. "The Case of the Unidentified Industries - 2006." Harvard Business School Case 207-096, January 2007. (Revised April 2008.) View Details
  23. Congoleum Corp. (Abridged)

    Describes the development and terms of the largest leveraged buyout up to the date of the case. The main problem is to value the positions of the various participants: lenders, equity holders, investment bankers, and management. This is an abridged version of an earlier case by D.W. Mullins, Jr.

    Keywords: Leveraged Buyouts; Mergers and Acquisitions; Financial Management; Negotiation Participants; Valuation;

    Citation:

    Fruhan, William E., Jr. "Congoleum Corp. (Abridged)." Harvard Business School Case 287-029, October 1986. (Revised February 2008.) View Details
  24. Duckworth Industries, Inc.--Incentive Compensation Programs

    A private company is considering an introduction of a long-run incentive compensation system in which payoffs to managers are determined by the economic value added for shareholders by their individual business units. The proposed new system is compared to a number of earlier incentive schemes utilized by the firm.

    Keywords: Executive Compensation; Management Teams; Business and Shareholder Relations; Motivation and Incentives; Value Creation;

    Citation:

    Fruhan, William E., Jr. "Duckworth Industries, Inc.--Incentive Compensation Programs." Harvard Business School Case 293-091, June 1993. (Revised November 2007.) View Details
  25. Arley Merchandise Corporation

    Involves the initial public offering of a firm's stock. The offering includes a money-back guarantee to investors from the issuing firm which comes in the form of a "put" option. Option valuation is thus an important issue in this case.

    Keywords: Initial Public Offering; Stocks; Cases; Valuation; Stock Options; Apparel and Accessories Industry; Service Industry;

    Citation:

    Fruhan, William E., Jr. "Arley Merchandise Corporation." Harvard Business School Case 287-063, February 1987. (Revised March 2006.) View Details
  26. Offshoring at Global Information Systems, Inc.

    This case explores the topic of offshoring high-tech jobs several perspectives. The issues presented include determining the stock price consequences of offshoring, examining the economic consequences of the offshore job to both the transferring and receiving countries, considering the competitive consequences of not offshoring, and thinking through the challenge of investing in a career that is vulnerable to future offshoring.

    Keywords: Economy; Stocks; Job Cuts and Outsourcing; Personal Development and Career; Competition;

    Citation:

    Fruhan, William E., Jr. "Offshoring at Global Information Systems, Inc." Harvard Business School Case 204-144, April 2004. (Revised July 2005.) View Details
  27. Esmark, Inc. (B)

    Esmark's management sells its most valuable business and its most unattractive business in an effort to reposition itself and maximize shareholder value.

    Keywords: Business Exit or Shutdown; Product Positioning; Business and Shareholder Relations; Reputation; Value;

    Citation:

    Fruhan, William E., Jr. "Esmark, Inc. (B)." Harvard Business School Case 283-014, July 1982. (Revised July 2004.) View Details
  28. Yield Curves and Bond Ratings Tutorial

    To preview this online product, Authorized Faculty can call our customer service department at 1-800-545-7685 or 617-783-7600. This online tutorial explains what drives the shape of the yield curve for traded debt securities. Also describes the metrics used by rating agencies to evaluate both corporate and sovereign debt. Presents data that show median values for a number of key rating metrics. To order this Web-delivered product, call our customer service department at 1-800-545-7685 or 617-783-7600.

    Keywords: Bonds; Investment Return; Financial Services Industry;

    Citation:

    Fruhan, William E., Jr. Yield Curves and Bond Ratings Tutorial. Harvard Business School Tutorial 204-712, April 2004. View Details
  29. STMicroelectronics N.V., 2003 Convertible Bond Offering

    Focuses on the valuation of a complex option embedded in a convertible debenture with a negative yield to maturity.

    Keywords: Bonds; Valuation;

    Citation:

    Fruhan, William E., Jr. "STMicroelectronics N.V., 2003 Convertible Bond Offering." Harvard Business School Case 204-092, October 2003. (Revised December 2003.) View Details
  30. Crown Cork & Seal/CarnaudMetalbox

    A U.S. packaging firm acquires a French packaging firm with the objective of creating the largest global packaging firm in the world.

    Keywords: Acquisition; Cross-Cultural and Cross-Border Issues; Service Industry; France; United States;

    Citation:

    Fruhan, William E., Jr., and William DeWitt. "Crown Cork & Seal/CarnaudMetalbox." Harvard Business School Case 296-019, April 1996. (Revised September 2003.) View Details
  31. Restructuring the U.S. Steel Industry

    Focuses on the competitive decline of the integrated steel producers in the United States from 1970 to 2002. Issues include: Should the U.S. government impose tariffs to try to protect the industry? What should labor unions do, if anything, to protect jobs and wage rates of employees in failing companies?

    Keywords: Restructuring; Jobs and Positions; Labor Unions; Wages; Business and Government Relations; Integration; Steel Industry; United States;

    Citation:

    Fruhan, William E., Jr. "Restructuring the U.S. Steel Industry." Harvard Business School Case 203-042, October 2002. (Revised June 2003.) View Details
  32. Restructuring the U.S. Steel Industry: Spreadsheet Exercise

    Description of an EXCEL spreadsheet exercise to test the impact of changes in wage rates on the value of debt and equity securities.

    Keywords: Equity; Debt Securities; Valuation; Wages; Restructuring; Steel Industry;

    Citation:

    Fruhan, William E., Jr. "Restructuring the U.S. Steel Industry: Spreadsheet Exercise." Harvard Business School Exercise 203-070, February 2003. View Details
  33. Note on the Equivalency of Methods for Discounting Cash Flows

    Uses a numerical example to demonstrate that when you discount the cash flows to capital from a project at the weighted average cost of capital, you get same net present value result as you obtain when discounting the cash flows to equity at the cost of equity. Also demonstrates why it is far easier to do a net present value calculation using the weighted average cost of capital (assuming a fixed debt ratio and market value weights) than it is to do the same calculation using the cost of equity.

    Keywords: Capital Structure; Cash Flow; Cost of Capital; Equity; Valuation;

    Citation:

    Fruhan, William E., Jr. "Note on the Equivalency of Methods for Discounting Cash Flows." Harvard Business School Background Note 202-128, June 2002. View Details
  34. Microsoft/Intuit

    Microsoft Corp. proposes to acquire Intuit Corp. Examines the strategic fit and the price proposed to complete the transaction.

    Keywords: Valuation; Software; Acquisition; Business Strategy; Information Technology Industry; United States;

    Citation:

    Fruhan, William E., Jr. "Microsoft/Intuit." Harvard Business School Case 295-121, May 1995. (Revised November 2001.) View Details
  35. Nike, Inc.--Entering the Millennium

    Traces the evolution of Nike from 1987 through 1998. Through a series of eight assignment questions, it examines how the company has created and sustained a competitive advantage, and how that competitive advantage is reflected in growth, profitability, and share price performance.

    Keywords: Competitive Advantage; Profit; Corporate Strategy; Business Growth and Maturation; Sports Industry; Apparel and Accessories Industry;

    Citation:

    Fruhan, William E., Jr. "Nike, Inc.--Entering the Millennium." Harvard Business School Case 299-084, March 1999. (Revised March 2001.) View Details
  36. Note on Alternative Methods for Estimating Terminal Value

    Reviews basic techniques for estimating terminal value in the valuation of businesses. Among the techniques discussed are perpetuities, growing perpetuities, use of multiples, and liquidation value. A rewritten version of an earlier note.

    Keywords: Financial Liquidity; Bonds; Valuation;

    Citation:

    Fruhan, William E., Jr. "Note on Alternative Methods for Estimating Terminal Value." Harvard Business School Background Note 298-166, June 1998. View Details
  37. Dynatronics, Inc.

    The student must determine the financing requirements posed by growth, change of inventory policy, and introduction of new product and then select the best method of financing them. Has been used as a four-hour exam. A revised and updated version of an earlier case by L.E. Thompson and V.L. Andrews.

    Keywords: Financial Strategy; Financing and Loans; Growth and Development; Product Launch;

    Citation:

    Fruhan, William E., Jr. "Dynatronics, Inc." Harvard Business School Case 289-063, May 1989. (Revised April 1998.) View Details
  38. Pressco, Inc.--1985

    A capital budgeting problem is viewed from the context of a marketing representative attempting to make a sale of energy saving heavy industrial equipment. Tax law changes promise to have a significant impact on the customer's decision process. Teaching purpose: To surround the capital budgeting decision with the complexities often found in the actual decision making process. These include taxes, inflation rates, and uncertainty about cost savings to be realized.

    Keywords: Capital Budgeting; Machinery and Machining; Valuation; Taxation; Customer Value and Value Chain; Cost vs Benefits; Inflation and Deflation; Cost Management; Product Marketing; North and Central America;

    Citation:

    Fruhan, William E., Jr. "Pressco, Inc.--1985." Harvard Business School Case 292-085, November 1991. (Revised December 1996.) View Details
  39. American Chemical Corp.

    A large chemical manufacturer divests a plant that is acquired by a small specialty chemicals manufacturer. The acquisition decision is viewed from the vantage point of the small specialty chemicals manufacturer.

    Keywords: Mergers and Acquisitions; Chemicals; Factories, Labs, and Plants; Decision Making; Manufacturing Industry; Chemical Industry;

    Citation:

    Fruhan, William E., Jr., and John P. Goldsberry III. "American Chemical Corp." Harvard Business School Case 280-102, March 1980. (Revised December 1995.) View Details
  40. Capital Structure Decision: Underlying Theory

    Demonstrates hypothetically and numerically the share price valuation impact of changes in a firm's capital structure.

    Keywords: Capital Structure; Decisions;

    Citation:

    Fruhan, William E., Jr. "Capital Structure Decision: Underlying Theory." Harvard Business School Background Note 272-096, December 1971. (Revised December 1994.) View Details
  41. KENETECH Corporation

    Involves a strategic decision about how fast to ramp up sales. Improvements in technology have driven down the cost of electric power generated from wind turbines to the point where they are competitive with fossil-fuel plants. KENETECH needs to raise equity capital to finance its growth. A fast growth strategy requires a greater amount of capital to be raised prior to the time when the new technology is fully proven, possibly requiring a lower per share stock price in an initial public offering. A slower growth strategy may allow powerful competitors time to enter the market, limiting KENETECH's total share of the wind turbine market.

    Keywords: Renewable Energy; Borrowing and Debt; Equity; Initial Public Offering; Growth and Development Strategy; Market Entry and Exit; Going Public; Sales; Competition; Energy Industry;

    Citation:

    Fruhan, William E., Jr. "KENETECH Corporation." Harvard Business School Case 294-111, April 1994. (Revised September 1994.) View Details
  42. Intuit, Inc.

    The merger of two computer software firms with very rapidly growing non-overlapping products makes great strategic sense, but presents difficult valuation and accounting problems. How can a firm pay $225 million to acquire another firm with negligible current earnings, and which promises to produce an immediate $150 MM one-time charge to earnings which will be followed over a five-year period by $65 million of amortization of intangible assets?

    Keywords: Valuation; Mergers and Acquisitions; Software; Accounting; Financial Strategy; Goodwill Accounting; Corporate Finance; Information Technology Industry; United States;

    Citation:

    Fruhan, William E., Jr. "Intuit, Inc." Harvard Business School Case 295-028, August 1994. View Details
  43. Note: Valuing a Business Acquisition Opportunity

    Describes how to value an acquisition opportunity as a capital budgeting problem. Cash flows are discounted at the cost of capital and debt is deducted to value the equity capital of the target company. A key contribution of the note is the discussion of five methods for establishing a terminal value for future cash flows extending beyond the normal planning horizon.

    Keywords: Valuation; Acquisition; Opportunities;

    Citation:

    Fruhan, William E., Jr. "Note: Valuing a Business Acquisition Opportunity." Harvard Business School Background Note 289-039, January 1989. (Revised October 1993.) View Details
  44. Friendly Cards, Inc.

    Involves analysis of a major capital investment proposal, an acquisition of another company, an estimate of the funds required for these two possible outlays, and a recommended course of management action.

    Keywords: Mergers and Acquisitions; Capital; Capital Budgeting; Investment;

    Citation:

    Fruhan, William E., Jr. "Friendly Cards, Inc." Harvard Business School Case 293-135, May 1993. (Revised June 1993.) View Details
  45. Harris Seafoods, Inc.

    Presents data relevant to a major capital expenditure--the construction of a shrimp plant. Designed to test student's ability to identify relevant cash flows, to estimate the cost of capital, and to decide whether or not to invest.

    Keywords: Decision Making; Cash Flow; Cost of Capital; Factories, Labs, and Plants; Food and Beverage Industry; Agriculture and Agribusiness Industry;

    Citation:

    Fruhan, William E., Jr., and William A. Sahlman. "Harris Seafoods, Inc." Harvard Business School Case 281-054, February 1981. (Revised June 1993.) View Details
  46. Carrefour S.A.

    Involves a very rapidly growing retail chain that is financing itself in an unusual (and at first glance) risky fashion.

    Keywords: Growth and Development Strategy; Financing and Loans; Risk and Uncertainty; Retail Industry;

    Citation:

    Fruhan, William E., Jr. "Carrefour S.A." Harvard Business School Case 273-099, January 1973. (Revised September 1990.) View Details
  47. Pressco, Inc.--1984

    A marketing representative of heavy industrial equipment needs to evaluate the net present value of his equipment from the perspective of the buyer under changing tax regulations.

    Keywords: Machinery and Machining; Valuation; Product Positioning; Performance Evaluation; Taxation; Price; United States;

    Citation:

    Fruhan, William E., Jr. "Pressco, Inc.--1984." Harvard Business School Case 287-025, September 1986. (Revised August 1987.) View Details
  48. Esmark, Inc. (A)

    Involves the management of a firm with a market value of a going concern that is less than its breakup value. How does management maximize value for shareholders in this environment?

    Keywords: Finance; Markets; Business and Shareholder Relations; Value; Food and Beverage Industry;

    Citation:

    Fruhan, William E., Jr. "Esmark, Inc. (A)." Harvard Business School Case 283-013, July 1982. (Revised December 1984.) View Details
  49. Hi-Tech Corp.

    Hi-Tech examines the financial implications of a reduction in the work force via a voluntary severance program which offers up to two and a half times annual pay if an employee voluntarily terminates employment.

    Keywords: Job Cuts and Outsourcing; Financial Management; Retirement; Employees; Compensation and Benefits; Corporate Finance; Technology Industry; Europe;

    Citation:

    Foulkes, Fred K., and William E. Fruhan Jr. "Hi-Tech Corp." Harvard Business School Case 283-045, December 1982. (Revised December 1984.) View Details
  50. Southport Minerals, Inc.

    Examines how the attractiveness of an investment project can be enhanced by making financing and operating decisions which either manage investment returns or reduce project risks.

    Keywords: Decisions; Financing and Loans; Investment; Investment Return; Risk Management; Operations; Projects;

    Citation:

    Fruhan, William E., Jr. "Southport Minerals, Inc." Harvard Business School Case 274-110, November 1973. (Revised April 1983.) View Details
  51. Note on the Theory of Optimal Capital Structure

    Examines the interrelationship between the maximization of the share value of a firm's common stock and the minimization of the firm's weighted average cost of capital. Presents a revised version of a case by J.W. Mullins, Jr.

    Keywords: Capital Structure; Cost of Capital; Stock Shares; Core Relationships; Value;

    Citation:

    Fruhan, William E., Jr. "Note on the Theory of Optimal Capital Structure." Harvard Business School Background Note 279-069, February 1979. View Details