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  • June 2018 (Revised February 2019)
  • Teaching Note
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Home Nursing of North Carolina

By: Richard S. Ruback, Royce Yudkoff and Ahron Rosenfeld
  • Format:Print
  • | Language:English
  • | Pages:17
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Abstract

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.)
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About The Authors

Richard S. Ruback

Finance
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Royce G. Yudkoff

Finance
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Related Work

    • November 2018
    • Faculty Research

    Home Nursing of North Carolina

    By: Richard S. Ruback and Royce Yudkoff
    • June 2018 (Revised February 2019)
    • Faculty Research

    Home Nursing of North Carolina

    By: Richard S. Ruback, Royce Yudkoff and Ahron Rosenfeld
Related Work
  • Home Nursing of North Carolina By: Richard S. Ruback and Royce Yudkoff
  • Home Nursing of North Carolina By: Richard S. Ruback, Royce Yudkoff and Ahron Rosenfeld
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