Carol Brewer's Investments

Richard S. Ruback; Julia  Stevens

Case | HBS Case Collection | July 2003 (Revised January 2004)

Carol Brewer's Investments

Abstract

Following her husband's death in 1994, Carol Brewer took over the management of her family's investments. This case describes the decisions Brewer made during this process, including her choice to seek active account management, her selection of an investment firm, and her determination of asset allocation within her portfolio. In 2003, Brewer is reassessing her previous investment choices and considering changes she might need to make in the future in light of her plans to retire in six years and live on the income from her investments.

Keywords: Investment Funds; Investment Portfolio; Retirement; Decision Choices and Conditions; Financial Management; Personal Finance; Investment Banking; Investment Return;

Format: Print

11 pages

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Citation:

Ruback, Richard S., and Julia Stevens. "Carol Brewer's Investments." Harvard Business School Case 204-017, July 2003. (Revised January 2004.)

Teaching Note for HBS No. 211-085. Greg Mazur (HBS 1997) identified a small firm, Great Eastern Premium Pet Food, in December of 1998 that fit his search criteria and decided to offer the seller a cash price of $1.2 million plus an earn-out equal to 1% of revenue over the next five years. He planned to invest $500,000 of his own money in the acquisition and finance the remainder with a senior loan in a formal letter of intent.
Great Eastern Premium Pet Food was a regional distributer of pet food products that operated in a highly competitive environment, with low profit margins, and no exclusive products. Great Eastern was barely profitable in 1997 and had profits of about $140,000 in 1998. Mazur evaluated the acquisition using a financial model that assumed a sales growth rate of 12.5% per year, and a gradual improvement in profit margin from 2% to 7.5% over five years. He identified ways to grow sales through changes in the composition and structure of the sales force and to improve margins through managing costs. The case explores the rationale for the acquisition and its evaluation, including the reasonableness of the financial model and its sensitivity to alternative assumptions.

Teaching Note | HBS Case Collection | June 2018 (Revised February 2019)

Home Nursing of North Carolina

Richard S. Ruback, Royce Yudkoff and Ahron Rosenfeld

In 2011, immediately after graduating HBS, Ari Medoff began a self-funded search for a small firm to buy and run as its CEO. After just three month of searching, he identified Home Nursing of North Carolina (HNNC), a home care agency based in Greensboro, NC, as a prospect and successfully negotiated a Letter of Intent in December 2011. HNNC was owned and run by a husband and wife eager to sell for personal reasons. It was an attractive target with recurring revenues and potential to grow. Medoff planned to finance 94% of the $3.6 million purchase price with debt from three sources: a bank loan, a seller note, and a loan from a group of individual investors. The remaining 6% came from Medoff’s personal wealth. The cash flow projections provided by Medoff indicated that investors’ debt would be paid in full in three years, well before the sellers’ seven-year balloon payment note matured.
With just a few weeks until closing, the sellers asked to renegotiate the terms of the seller note that had been agreed to early in the acquisition process. The sellers asked for personal guarantees from the individual investors, something Medoff knew his investors would not agree to. Medoff attempted to negotiate modifications to the sellers' note that would offer more security but would not include additional personal guarantees. The modification also included a provision that would reduce the sellers’ note if HNNC failed to reach recent EBITDA levels. When the seller rejected this offer, Medoff was considering whether he should abandon the deal and either resume his search or switch to a more traditional employment path. Teaching Note for HBS Nos. 212-120 and 218-709.

Keywords: small firms management; Acquisition; Negotiation Process; Investment; Small Business; Management; Personal Development and Career;

Citation:

Ruback, Richard S., Royce Yudkoff, and Ahron Rosenfeld. "Home Nursing of North Carolina." Harvard Business School Teaching Note 218-130, June 2018. (Revised February 2019.) View Details

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