Description and goals
Set in May 2008, this case reflects the separate perspectives of chief executive officers Tom Eliot and Bill Flinder as they approach the negotiations of RSE International Corporation to acquire Flinder Valves and Controls Inc. Your task is to complete a valuation analysis of the target and buyer and to negotiate a price and exchange ratio with the counterparty
The case has the following goals:
• Exercise valuation skills: The case affords opportunities for valuation based on discounted cash flow, comparable transaction multiples, and current market prices. Also included are such valuation details as options and contingent interests, operating synergies, gains from horizontal expansion, and the need to satisfy various stakeholders.
● Illustrate practical concerns about mergers and acquisitions: Additional questions the buyers and sellers face include setting the exchange ratio of shares, tax exposure, dilution, and voting power.