To include an item in your complimentary custom book, click the item’s Add link. If there is a View link next to an item, you can view the pages by clicking on the link.
•
To review the list of items you have selected so far, click on Step 2 in the progress bar above.
Case Meulbroek, Lisa Some of the senior managers at Ameritrade, an Internet brokerage firm, are selling their holdings in the firm. Why are the managers selling, how will it affect shareholders, and what should the CEO do about it? The CEO is concerned tha HBS Number: 9-200-057 Type: Case (Field) Publication Date: 4/6/2000 Revision Date: 7/13/2000 Geographic Setting: Omaha, NE Industry Setting: online securities brokerage Number of Employees: :2,379 Gross Revenues: $315 million revenues Event Year Start: 1999 Event Year End: 1999 Subjects: Executive compensation; Hedging; Incentives; Insider trading; Internet; Portfolio management; Risk management; Stock options
Case Author(s): Jeffery, Mark; Ekici, H. Nevin; Shield, Cassidy; Conley, Mike Publication Date: 01/01/2006 Revision Date: 03/01/2008 Product Type: Case (Field) HBS Number: KEL217 Geographic Setting: New York; United States Industry Setting: Financial services; IT industry Subjects: Accounting; Depreciation; Equipment; Finance; Information technology; Leasing Academic Discipline: Finance Supplementary Materials: Supplement (Spreadsheet), (KEL219), 0p, by Mark Jeffery, H. Nevin Ekici, Cassidy Shield, Mike Conley; Supplement (Spreadsheet), (KEL220), 0p, by Mark Jeffery, H. Nevin Ekici, Cassidy Shield, Mike Conley; Teaching Note, (KEL218), 18p, by Mark Jeffery, Susan Deutsch, Paolo Cuomo Product Description: Examines the lease vs. buy decision for investments in technology. Addresses pivotal investment decision issues such as varying the length of the lease, the useful life of the equipment, and alignment with the company's overall financial strategy. The scenario is for a real financial services firm that has been disguised for confidentiality reasons. Presents an investment decision: should a company buy or lease technology with a relatively short useful life? The new controller at AMG, a Fortune 500 financial services firm, has been tasked with determining how to finance the acquisition of 7,542 new PCs to be rolled out over the next 12 months. This is a $6.7 million investment decision and the rollout schedule adds significant complexity to the solution. The controller must choose between buying or leasing the computers over 24- or 36-month time frames. Provides a framework for analyzing similar investment decisions. The key learning point is that leasing information technology can be cheaper than buying. This is contradictory to a car lease, which may be familiar from everyday experience. A new car has a potentially long useful life and can retain significant value
Teaching Note Author(s): Jeffery, Mark; Deutsch, Susan; Cuomo, Paolo Publication Date: 01/01/2006 Product Type: Teaching Note HBS Number: KEL218 Academic Discipline: Finance Product Description: An abstract is not available for this product. Must be used with: (KEL217) AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions.
Case Author(s): Esty, Benjamin C.; Ferman, Carrie; Lysy, F Publication Date: 04/17/2002 Revision Date: 02/07/2003 Product Type: Note Product Description: Discusses the differences between private and social returns and describes an economic framework for assessing a project's social return [known as the economic rate of return (ERR)]. The framework begins by analyzing the impact of a new project on private financiers [the private return known as the financial rate of return (FRR)]. The framework then identifies other stakeholders who might be affected, directly or indirectly, by the project and examines the project's impact on each group. Assumes readers have a working knowledge of cost-benefit analysis, microeconomics, and basic valuation mechanics. May be used with: (9-202-054) Nghe An Tate & Lyle Sugar Co. (Vietnam). HBS Number: 9-202-052 Subjects: Business government relations; Cost benefit analysis; Economic development; Emerging markets; Project finance; Supply & demand; Valuation Academic Discipline: Finance
Case Author(s): Ruback, Richard S. Publication Date: 05/24/1995 Revision Date: 10/16/1995 Product Type: Note Product Description: Provides an introduction to three cash flow valuation methods. The three methods differ in their measure of cash flows and the discount rate applied to those cash flows. The names for the three methods correspond to the type of cash flow that is used in the valuation: Equity Cash Flow (ECF), Capital Cash Flow (CCF), and Free Cash Flow (FCF). The three methods provide consistent valuations when applied correctly. HBS Number: 9-295-155 Subjects: Cash flow; Valuation Academic Discipline: Finance
Case Author(s): Esty, Benjamin C.; Qureshi, Fuaad A.; Mill Publication Date: 08/06/1999 Revision Date: 02/16/2000 Product Type: Note Product Description: Provides a basic introduction to the principles of Islamic finance. Examines the religious background and legal foundations of Islamic finance. Also discusses the development of Islamic financial institutions and the financial instruments they use. Concludes with a discussion of recent developments and future challenges for this growing segment of the global financial system. May be used with: (9-200-012) The International Investor: Islamic Finance and the Equate Project. HBS Number: 9-200-002 Subjects: Banking; Financial institutions; Financial instruments; Legal aspects of business; Middle East; Religion & business Academic Discipline: Finance
Case Author(s): Lerner, Josh Publication Date: 11/01/1994 Revision Date: 01/11/2006 Product Type: Note Product Description: Provides an overview of patent and trade secret protection. Also discusses the legal processes through which intellectual property is protected and litigated. HBS Number: 9-295-062 Subjects: Innovation; Legal aspects of business; Patents; Product introduction; R&D Academic Discipline: Finance
Case Author(s): Esty, Benjamin C.; Christov, Irina Publication Date: 04/04/2002 Product Type: Note Product Description: Provides an introduction to the field of project finance and a statistical overview of the project-financed investments over the last five years. Consists of four sections. The first section defines project finance and contrasts it with other well-known financing structures. The second section describes the evolution of project finance from its beginnings in the natural resources industry in the 1970s to the U.S. power industry in the 1980s and to a much wider range of industry applications and geographic locations in the 1990s. The third section provides a statistical overview of the project-financed investment over the last five years (1997-2001) in terms of industry, project, and participant data. The final section discusses current and likely future trends. Besides providing an overview of recent trends, the note provides terminology and institutional details for readers unfamiliar with project finance. Teaching Purpose: Intended to familiarize readers with the concept of project finance. Provides descriptive statistics on the use of project finance (e.g., the size of the market, the types of projects, and the location of projects, etc.) as well as data on the major participants in the field. HBS Number: 9-202-105 Subjects: Banking; Contracts; Industry analysis; Industry structure; International finance; Market analysis; Project finance Academic Discipline: Finance
Case Author(s): Esty, Benjamin C.; Sesia , Aldo, Jr. Publication Date: 04/19/2005 Revision Date: 04/29/2005 Product Type: Note Product Description: Introduces the field of project finance and provides a statistical overview of the project-financed investments over the last five years. Defines project finance and contrasts it with other well-known financing structures. Describes the evolution of project finance, from its beginnings in the natural resources industry in the 1970s to the U.S. power industry in the 1980s and to a much wider range of industry applications and geographic locations in the 1990s and 2000s. Provides a statistical overview of project-financed investments over the last five years (2000-2004), featuring industry, project, and participant data. Also discusses current and likely future trends and provides terminology and institutional details. HBS Number: 9-205-065 Event Year Start: 2000 Event Year End: 2004 Subjects: Agreements; Banking industry; Contracts; Industry analysis; International business; International finance; Market analysis; Project finance; Project management Academic Discipline: Finance
Case Author(s): Esty, Benjamin C.; Harris, Suzie; Krueger, Publication Date: 12/13/1999 Revision Date: 01/10/2002 Product Type: Note Product Description: Provides an introduction to the field of project finance and a statistical overview of the project finance market as of the mid-to-late 1990s. Consists of four sections. The first section defines project finance and contrasts it with other well-known forms of financing. The second section describes the evolution of project finance from its origins in the 13th century in the mining industry, to the U.S. electric power industry in the 1970s and 1980s, and to a much wider range of applications and locations in the 1990s. The third section provides a statistical overview of the project finance market as it exists today in terms of industry, project, and participant data. The final section discusses current and likely future trends. There is also an appendix that describes sources of industry data and other project finance information. Teaching Purpose: Intended to familiarize readers with the concept of project finance. Provides descriptive statistics on the use of project finance (e.g., the size of the market, the types of projects, and the location of projects, etc.) as well as data on the major participants in the field. HBS Number: 9-200-028 Subjects: Banking; Industry analysis; Industry structure; International finance; Market analysis; Project finance Academic Discipline: Finance
Case Author(s): Kester, W. Carl; Melnick, Richard P. Publication Date: 06/29/1988 Revision Date: 12/06/1991 Product Type: Case (Field) Product Description: An Tai Bao is the world's largest open-pit coal mine and is located in China's Shanxi province. After eight years of planning and negotiating, Occidental Petroleum, the foreign partner in the deal, is about to sign an ownership and financing agreement for $475 million that involves $20 million of its own equity and limited recourse. The deal contains a number of unusual features including the tying of recourse to nonconcurrent, partial competition tests, and a covenant forcing sponsors to buy back the entire project from the joint venture owning it in the event of postcompletion default. Students are required to determine if the terms of the deal are attractive to each of the parties involved. HBS Number: 9-288-041 Geographic Setting: ChinaIndustry Setting: coalCompany Size: Fortune 500Gross Revenues: $475 million revenues Event Year Start: 1986Event Year End: 1986 Subjects: China; Equity financing; International finance; Joint ventures; Mining Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-290-039), 14p, by W. Carl Kester
Case Author(s): Sahlman, William A.; Green, Jason Publication Date: 04/03/1995 Revision Date: 01/13/2003 Product Type: Case (Field) Product Description: Anasazi is a hair-care products start-up based in the Midwest that is going through growing pains as it tries to develop a new distribution model for the professional hair salon industry. The company has completed several rounds of venture financing but needs to raise more capital earlier than expected to continue. It goes through a process of refining and refocusing its strategy to raise the new funds. Teaching Purpose: To discuss the issues facing a start-up firm that has missed its initial financial projections but has made considerable progress otherwise. Relations with venture capital backers are a critical element as well. HBS Number: 9-295-111 Geographic Setting: Dubuque, IA Industry Setting: hair-care products, beauty salons Gross Revenues: $4 million revenues Event Year Start: 1994 Event Year End: 1994 Subjects: Consumer goods; Distribution; Distribution channels; Entrepreneurial finance; Entrepreneurship; Venture capital; Women Academic Discipline: Finance
Case Author(s): Poorvu, William J.; Feder, Leslie M. Publication Date: 08/13/1985 Revision Date: 01/22/1992 Product Type: Case (Field) Product Description: A recent college graduate decides to buy a small multiple-unit building in Boston as a residence and an investment. He learns about finding and valuing properties, property management, construction, and mortgages. After some difficulty he finds a building in an area that is increasing in value. The previous owner has run out of funds to complete renovations. HBS Number: 9-386-036 Geographic Setting: Boston, MAIndustry Setting: real estate Event Year Start: 1984Event Year End: 1984 Subjects: Financing; Housing; Mortgages; Real estate; Securities analysis; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-391-210), 5p, by William J. Poorvu, Katherine Sweetman
Case Author(s): Hatten, Kenneth J.; Poorvu, William J.; Stevenson, Howard H. Publication Date: 06/01/1975 Revision Date: 09/30/2004 Product Type: Case (Gen Exp) Product Description: Judy and John DeRight, looking to diversify their investment portfolios, have retained Angus Cartwright, Jr. to identify prospective real estate acquisitions. Mr. Cartwright has four potential properties that he feels merit an in-depth financial analysis. The case provides an opportunity to examine the various components of real estate return -- cash flow, tax benefits, and futures -- and measure the profitability of a proposed investment through the calculation of net present value, internal rate of return, and capitalization rate. HBS Number: 9-375-376 Geographic Setting: United StatesIndustry Setting: real estate Subjects: Financial analysis; Rates of return; Real estate; Securities analysis Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-304-094), 21p, by William J. Poorvu, Arthur I. Segel
Case Author(s): Sirri, Erik; Shakes, Jonathan Publication Date: 12/15/1990 Revision Date: 11/20/1992 Product Type: Case (Library) Product Description: In 1984, the SEC accused Paul Thayer and eight others of insider trading. Some of Thayer's inside information came from his position on the board of Anheuser-Busch, where he had learned about Busch's 1982 merger with Campbell Taggart before the merger was publicly announced. The case deals with Busch's reaction after learning about the SEC suit. In considering possible actions by Busch, students may explore the workings of capital markets and attempt to estimate the amount of financial damage done to Busch by the insider trading. Other issues involve ethics, the allocation of management resources on costly legal battles, and the differing objectives of board members and managers. HBS Number: 9-291-020 Geographic Setting: Missouri and TexasIndustry Setting: brewery, bakeryCompany Size: Fortune 500Gross Revenues: $5 billion gross profit Event Year Start: 1982Event Year End: 1985 Subjects: Beverages; Capital markets; Ethics; Legal aspects of business; Tender offers Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-292-026), 13p, by Erik Sirri
Case Author(s): Sirri, Erik Publication Date: 11/20/1992 Revision Date: 11/10/1993 Product Type: Case (Library) Product Description: In 1984, the SEC accused Paul Thayer and eight others of insider trading. Some of Thayer's inside information came from his position on the board of Anheuser-Busch, where he had learned about Busch's 1982 merger with Campbell Taggart before the merger was publicly announced. The case deals with Busch's reaction after learning about the SEC suit. In considering possible actions by Busch, students may explore the workings of capital markets and attempt to estimate the amount of financial damage done to Busch by the insider trading. Other issues involve ethics, the allocation of management resources on costly legal battles, and the differing objectives of board members and managers. HBS Number: 9-293-082 Geographic Setting: Missouri and TexasIndustry Setting: brewery, bakeryCompany Size: Fortune 500Gross Revenues: $5 billion gross profit Event Year Start: 1982Event Year End: 1985 Subjects: Beverages; Capital markets; Ethics; Legal aspects of business; Tender offers Academic Discipline: Finance
Case Author(s): Desai, Mihir A.; Veblen, Mark F.; Villalonga, Belen Publication Date: 12/23/2003 Product Type: Case (Library) Product Description: Helps students understand the principles underlying competition and antitrust policy in the context of the proposed GE-Honeywell merger. The U.S. Department of Justice has already approved the transaction and it is being considered by the European Commission. The Competition Commissioner, Mario Monti, must analyze the economic consequences of the proposed merger and evaluate how it will affect competitors, customers, and product markets. He must also address key policy choices. In understanding the nuances of the transaction, students identify different sources of value and must confront the question of whether the efficiencies generated enhance social welfare in the long run. The decision of whether to approve the merger, and on what terms, provides students with insights into the complexities of operating under multiple regulatory regimes. Teaching Purpose: To produce an understanding of (i) the economic impact of mergers and (ii) how and why international regulators may decide about them. Students model the vertical and horizontal relationships in the aerospace market to understand where the levers of market power might be important. Armed with this information, they grapple with competing economic theories of what economic variables should determine regulatory policy. HBS Number: 9-204-081 Geographic Setting: Brussels, Belgium Industry Setting: aerospace Event Year Start: 2001 Event Year End: 2001 Subjects: Aerospace industry; Antitrust laws; Business government relations; Competition; Europe; Industrial policy; Mergers; Regulatory agencies Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-205-094), 20p, by Mihir A. Desai, Belen Villalonga
Teaching Note For use with 9-204-081 HBS Number: 5-205-094 Subjects: Aerospace industry; Antitrust laws; Business government relations; Competition; Europe; Industrial policy; Mergers; Regulatory agencies
Case Author(s): Barth, Mary E.; Stockton, Hilary Publication Date: 02/01/2000 Revision Date: 10/16/2001 Product Type: Case (Library) Publisher: Stanford University HBS Number: A171 Geographic Setting: United States Industry Setting: media Number of Employees: 88,500 Gross Revenues: $7,703 million revenues Event Year Start: 2000 Event Year End: 2000 Subjects: Accounting procedures; Internet; Mergers; Stocks Academic Discipline: Finance Product Description: AOL investor Fred Grant was surprised and disappointed by the January 10, 2000 announcement of the AOL Time Warner merger. He had been fortunate enough to buy AOL at $40 in October 1999, just prior to the stock's rapid rise to $95 in mid-December. Although just days prior to the merger announcement the stock had settled to $73, by February 2, 2000, it had suffered another decline — to $57 per share. Although many observers spoke in glowing terms of the enormous synergies between Time Warner's premier content, advertising, and cable distribution channels and AOL's Internet brand, marketing savvy, and subscriber base, analysts predicted that growth for the merged company would be in the 15%-20% range, one-half of what Grant expected for his AOL holdings. Analysts also warned of the management and execution risks associated with the enormous and unprecedented combination of Internet and traditional media businesses. Finally, Grant was concerned about the implications of AOL Time Warner's use of the purchase rather than pooling method to account for the deal. Why wouldn't the company use pooling accounting, as had other companies for large stock deals such as NationsBank-BankAmerica and Travelers-Citicorp? Would goodwill's dampening effect on earnings hurt the market valuation of the new company? As Grant watched his AOL stock slide in the days following the merger announcement, he wondere
Case Author(s): Kasznik, Ron; Tayan, Brian Publication Date: 08/12/2007 Product Type: Case (Field) Publisher: Stanford University HBS Number: A196A Geographic Setting: United States Industry Setting: Entertainment industry; Internet & online services industries Subjects: Accounting; Accounting standards; Balance sheets; Mergers & Acquisitions Academic Discipline: Finance Product Description: Reviews the impact of SFAS 142 — Goodwill and Other Intangible Assets — in the context of the AOL Time Warner merger. Under SFAS 142, companies were required to perform periodic testing to determine whether economic goodwill had been impaired. Includes a detailed account of the AOL Time Warner merger from its announcement in 2000 through its completion in 2001. Students are asked to assess what the likely impact is of SFAS 142 on the combined AOL Time Warner balance sheet.
Case Author(s): Kasznik, Ron; Tayan, Brian Publication Date: 08/12/2007 Product Type: Case (Field) Publisher: Stanford University HBS Number: A196B Geographic Setting: United States Industry Setting: Entertainment industry; Internet & online services industries Subjects: Accounting; Accounting standards; Balance sheets; Mergers & Acquisitions Academic Discipline: Finance Product Description: Reviews the recognition of goodwill impairment taken by AOL Time Warner following the adoption of SFAS 142 — Goodwill and Other Intangible Assets.
Case Author(s): Lerner, Joshua; Hardymon, G. Felda; Alvare Publication Date: 02/02/2001 Revision Date: 03/04/2001 Product Type: Case (Field) Product Description: Apax Partners considers a complex buyout of a semiconductor manufacturer. The firms must assess in a compressed time-frame the complex technological, financial, and operational risks that the proposed transaction poses. Teaching Purpose: To illustrate the structuring of leveraged buyouts. HBS Number: 9-201-044 Geographic Setting: EuropeIndustry Setting: private equity Event Year Start: 1998Event Year End: 1998 Subjects: Europe; Financial management; Financial strategy; Leveraged buyouts; Semiconductors; Venture capital Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-202-042), 10p, by G. Felda Hardymon, Joshua Lerner, Ann Leamon
Teaching Note For use with 9-201-044 HBS Number: 5-202-042 Subjects: Europe; Financial management; Financial strategy; Leveraged buyouts; Semiconductors; Venture capital
Case Author(s): Lerner, Joshua Publication Date: 10/27/1995 Revision Date: 11/17/1997 Product Type: Case (Field) Product Description: The partners of Apex Investment Partners are seeking to provide financing for Accessine Technologies, a small firm specializing in providing “One Person, One Number'' telecommunication services. The negotiation of the terms-and-conditions of the deal, as well as its pricing, prove challenging. HBS Number: 9-296-028 Geographic Setting: Chicago, IL/Seattle, WA Industry Setting: venture capital Number of Employees: 4 Event Year Start: 1995 Event Year End: 1995 Subjects: Entrepreneurial finance; Financing; Negotiations; Telecommunications; Valuation; Venture capital Academic Discipline: Finance Supplementary Materials: Supplement (Field), (9-296-029), 7p, by Joshua Lerner, Sanjiv Das; Teaching Note, (5-298-160), 17p, by Joshua Lerner
Teaching Note For use with 9-296-028 HBS Number: 5-298-160 Subjects: Entrepreneurial finance; Financing; Negotiations; Telecommunications; Valuation; Venture capital
Teaching Note For use with 9-296-029 HBS Number: 5-298-160 Subjects: Entrepreneurial finance; Financing; Negotiations; Telecommunications; Valuation; Venture capital
Case Author(s): Mason, Scott P.; Durdan, Sally E. Publication Date: 03/28/1986 Revision Date: 07/28/1986 Product Type: Case (Library) Product Description: Consists of a series of four brief descriptions of the use of financial futures as hedging vehicles: a savings and loan hedging the rollover of three-month money market certificates with T-bill futures, a corporate debt issuer hedging the cost of a future debt issue with T-bond futures, an equity investor hedging a decline in the market, and an example of a company with a natural interest rate hedge on its balance sheet. The examples describe the details of T-bill, T-bond, and S&P 500 stock index futures. Issues addressed include variation margin and basis risk (due to differences in the securities underlying the cash and futures positions, changes in the carry, etc.). HBS Number: 9-286-109 Geographic Setting: Unspecified Subjects: Capital markets; Hedging; Risk management; Securities Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-287-044), 13p, by Scott P. Mason, Sally E. Durdan
Case Author(s): Davila, Antonio; Wouters, Marc Publication Date: 05/22/2000 Product Type: Case (Field) Publisher: Stanford University Product Description: SigmaX is the latest generation of manufacturing equipment for integrated circuits (semiconductor chips). SigmaX is used to perform one of the manufacturing steps called etching. As it usually happens at Applied Materials and because of the time pressure and the complexity of the technology involved, any other considerations--including product cost--are eclipsed during its development. But when SigmaX reaches the manufacturing stage (Worldwide Manufacturing Operations), product cost management becomes key to ensure adequate profits. At this point, Bill Finday and his team are in charge of managing product costs down. To achieve their objective, first they need to understand why actual costs are above expected costs. Next, they need to explore the various alternatives open to them to manage costs down initially to the planned level and then below it in an effort to maintain margins as competition drives prices down. Furthermore, a new generation of etching equipment will be developed soon and Bill and his team have to make recommendations regarding how to change the product development process to enhance the visibility of cost considerations. HBS Number: A164 Geographic Setting: Silicon Valley, CAIndustry Setting: semiconductorsGross Revenues: $6 billion revenues Subjects: Manufacturing; Product development; Semiconductors; Silicon Valley; Variance analysis Academic Discipline: Finance
Case Author(s): Edleson, Michael E.; Tufano, Peter Publication Date: 01/08/1993 Revision Date: 06/28/1995 Product Type: Case (Library) Product Description: Documents a pricing anomaly in the large and liquid treasury bond market. The prices of callable treasury bonds seem to be inconsistent with the prices of noncallable treasuries and an arbitrage opportunity appears to exist. Permits instructors to introduce the treasury market, the concept of creating synthetic instruments, principles of arbitrage, and institutional frictions in the bond markets. HBS Number: 9-293-093 Geographic Setting: United States Industry Setting: money management Event Year Start: 1991 Event Year End: 1991 Subjects: Bonds; Capital markets; Securities analysis; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-296-059), 10p, by Peter Tufano
Case Author(s): Pierson, Leslie S.; El-Hage, Nabil N. Publication Date: 11/12/2008 Revision Date: 01/22/2009 Product Type: Case (Field) HBS Number: 209023 Geographic Setting: Bahrain Industry Setting: Private equity; Real estate Number of Employees: 300 Gross Revenues: $68 million Event Year Start: 2002 Event Year End: 2002 Subjects: Investments; Private equity Academic Discipline: Finance Product Description: In 2002, Arcapita Bank, B.S.C., then known as First Islamic Investment Bank, or FIIB, faced a liquidity crunch. Aracapita offered Islamic-compliant private equity, real estate, and venture capital products. In the wake of the 9/11 terrorist attack, however, Islamic banking was an endangered species in the U.S. Should Arcapita change its business model, and how should it finance its growing capital needs?
Case Author(s): Gilson, Stuart C.; Fagan, Perry L. Publication Date: 01/03/2005 Product Type: Case (Library) Product Description: The largest wireless paging company in the United States has to restructure its debt in response to the collapse of its market. The restructuring faces formidable challenges. Valuing the company is extremely difficult because Arch's public competitors are also severely troubled and the industry's future is highly uncertain. In addition, the company has an extremely complicated parent-subsidiary holding company structure. Teaching Purpose: To look at structural subordination, contractual subordination, secured debt, and substantive consolidation in bankruptcy as well as debt security and subordination, restructuring, and Chapter 11. HBS Number: 9-205-024 Geographic Setting: Massachusetts Industry Setting: wireless communications Gross Revenues: $1 billion revenues Event Year Start: 2001 Event Year End: 2002 Subjects: Bankruptcy; Capital structure; Debt management; Reorganization; Restructuring; Strategy formulation; Telecommunications; Valuation Academic Discipline: Finance
Case Author(s): Fruhan, William E., Jr. Publication Date: 02/02/1987 Revision Date: 03/14/2006 Product Type: Case (Library) Product Description: 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. HBS Number: 9-287-063 Geographic Setting: New England Industry Setting: Home furnishings Gross Revenues: $270 million sales Event Year Start: 1984 Event Year End: 1984 Subjects: Equity financing; Stock offerings; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-296-070), 10p, by William E. Fruhan Jr., Andre F. Perold
Case Author(s): Cohen, Randolph B.; Wallace, Jason Publication Date: 09/23/2002 Revision Date: 01/27/2003 Product Type: Case (Field) Product Description: Analyzes a large investment decision considered by the Texas Rangers in 2000: whether to spend $252 million for the services of shortstop Alex Rodriguez. The signing was probably the most controversial sports contract of the past decade. Teaching Purpose: 1) To teach students to evaluate a complex investment decision -- the signing of the largest player contract in baseball history (was $252 million too high a price to pay?) -- as well as to look at regression analysis, complex conditional cash flows, and discounting; and 2) to consider the difference between correlation and causation, the nature of insurance, and the long-run benefits of brand improvement. HBS Number: 9-203-047 Geographic Setting: TexasIndustry Setting: sports/entertainmentNumber of Employees: 200Gross Revenues: $126.5 million revenues Event Year Start: 2000Event Year End: 2000 Subjects: Brand management; Cash flow; Insurance; Investments; Present value; Regression analysis; Sports Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-203-091), 18p, by Randolph B. Cohen, Joyce Chi
Case Author(s): El-Hage, Nabil N.; Payton, Christopher E.J. Publication Date: 11/01/2006 Revision Date: 10/22/2007 Product Type: Case (Field) HBS Number: 9-207-067 Geographic Setting: United States Industry Setting: Entertainment industry; Private equity Gross Revenues: $365 million revenues Event Year Start: 1999 Event Year End: 1999 Subjects: Entertainment; Financing; Fund raising; Institutional investments; Investments; Leveraged buyouts; Loans; Options Academic Discipline: Finance Product Description: Geoff Rehnert and Marc Wolpow have left Bain Capital to launch Audax Group. As part of their separation, they have been granted 90-day options to purchase Bain Capital's stake in a number of portfolio companies at Fair Market Value. As they consider whether to exercise their option to purchase Bain Capital's stake in Artisan Entertainment, the company has an extremely successful launch of “The Blair Witch Project.” However, Rehnert and Wolpow have not yet raised Audax Group's first fund, and are not able personally to finance the purchase, which would require approximately $30 million. They must decide whether to go through with the purchase, and how to finance it, keeping in mind any issues such an investment would raise for prospective investors in their first private equity fund.
Case Author(s): Luehrman, Timothy A.; Teichner, William A Publication Date: 06/12/1992 Product Type: Case (Field) Product Description: A group of investors is considering buying the sequel rights for a portfolio of feature films. They need to determine how much to offer to pay and how to structure a contract with one or more major U.S. film studios. The case contains cash flow estimates for all major films released in the United States during 1989. These data are used to generate estimates of the value of sequel rights prior to the first film's release. Designed to introduce students to real options and techniques for valuing them. It clearly illustrates the power of option pricing techniques for certain types of capital budgeting problems. Also illustrates the practical limitations of such techniques. May be used with: (9-295-074) Capital Projects as Real Options: An Introduction. HBS Number: 9-292-140 Geographic Setting: California Industry Setting: movies Company Size: large Gross Revenues: $2.1 billion revenues Event Year Start: 1992 Event Year End: 1992 Subjects: Capital budgeting; Decision trees; Entertainment industry; Option pricing; Real options; Securities analysis; Uncertainty Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-295-118), 14p, by Timothy A. Luehrman
Teaching Note For use with 9-292-140 HBS Number: 5-295-118 Subjects: Capital budgeting; Decision trees; Entertainment industry; Option pricing; Real options; Securities analysis; Uncertainty
Case Author(s): Roberts, Michael J.; Sull, Donald N. Publication Date: 05/04/2004 Revision Date: 05/25/2006 Product Type: Case (Field) Product Description: The cofounder and CEO of AsiaInfo, a Chinese system integrator that built 70% of China's Internet backbone, must decide whether to list equity in the United States to fund future growth. Describes the company and the decision. A rewritten version of a previous case. HBS Number: 9-804-183 Geographic Setting: Beijing; China Industry Setting: Internet & online services industries; Telecommunications industry Number of Employees: 450 Gross Revenues: $60 million revenues Event Year Start: 1999 Event Year End: 1999 Subjects: Business growth; Culture; Entrepreneurial finance; Entrepreneurs; Internet; IPO; Management philosophy; Social responsibility; Venture capital Academic Discipline: Finance
Case Author(s): Tufano, Peter; Poetzscher, Cameron Publication Date: 10/10/1995 Revision Date: 07/18/1996 Product Type: Case (Field) Product Description: The chief financial officer of a rapidly-growing U.S.-based software firm that sells its process-control software to industrial users around the globe must review the goals, strategies, and policies of the firm's currency hedging program. This review is prompted by changes in the firm's business, notably its acquisition of a United Kingdom subsidiary, other growing overseas expenses, and its recent initial public offering. Teaching Purpose: Intended to allow students to analyze how a small, young firm's business strategy creates currency exposure and a need to manage this exposure. Designed to allow students to explore the goals and purposes of currency hedging, the measurement of exposures, and appropriate policies to be followed. HBS Number: 9-296-027 Geographic Setting: New England/Global Industry Setting: software Company Size: small Number of Employees: 417 Gross Revenues: $57 million revenues Event Year Start: 1995 Event Year End: 1995 Subjects: Foreign exchange; Hedging; Risk assessment; Risk management; Software Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-298-091), 14p, by Peter Tufano
Case Author(s): Piper, Thomas R. Publication Date: 12/21/2000 Revision Date: 07/29/2002 Product Type: Note Publisher: Harvard Business School HBS Number: 201077 Subjects: Financial analysis; Forecasting; Financial ratios Academic Discipline: Finance Supplementary Materials: Case Teaching Note, (201085), 5p, by Thomas R. Piper Product Description: Describes a step-by-step process by which one can assess whether a firm's strategy, with its resultant resource requirements, is in line with its financing capabilities. Asks students to answer a series of questions about financial ratios, discussing where each type ratio is helpful in assessing whether the corporate financial system will remain in balance. The final section asks students to identify each of five industries based on their financial characteristics. A rewritten version of an earlier case.
Case Author(s): Stafford, Erik ; Coval, Joshua D; Osmo, Rodrigo ; Page, Zack ; Jernigan, John ; Passoni, Paulo Publication Date: 11/15/2007 Product Type: Note Publisher: Harvard Business School HBS Number: 208086 Event Year Start: 2007 Event Year End: 2007 Subjects: Asset allocation; Investment management; Risk management Academic Discipline: Finance Supplementary Materials: Case Teaching Note, (208089), 8p, by Erik Stafford,Joshua D Coval Product Description: The goal of these simulations is to understand the mathematics of mean-variance optimization and the equilibrium pricing of risk if all investors use this rule with common information sets. Simulation A focuses on five to 10 years of monthly sector returns that are initially drawn from a known multivariate normal distribution. Mean-variance optimization is designed to produce the highest ratio of excess portfolio return to portfolio standard deviation (i.e. the highest Sharpe ratio) in this setting. Simulation B alters the setting by allowing students to determine expected returns through a simultaneous auction. We continue to have agreement over the covariance matrix, and implicitly over expected payoffs, but allow students to set market prices. The average portfolio weights across the 10 sectors is calculated and is used as the vector of market capitalization weights. With these market weights (w) and the given covariance matrix, the capital asset pricing model (CAPM) implied expected returns are calculated for each sector and compared with the student set expected returns.
Case Author(s): Osmo, Rodrigo; Page, Zack; Jernigan, John; Passoni, Paulo; Stafford, Erik; Coval, Josh Publication Date: 11/15/2007 Product Type: Supplement HBS Number: 208087 Subjects: Asset allocation; Investment management; Risk management Academic Discipline: Finance Supplementary Materials: Teaching Note, (208089), 8p, by Erik Stafford, Josh Coval Product Description: An abstract is not available for this product. Must be used with: (208086) Asset Allocation I. May be used with: (208088) Asset Allocation III.
Case Author(s): Stafford, Erik; Coval, Josh Publication Date: 11/15/2007 Product Type: Supplement HBS Number: 208088 Subjects: Asset allocation; Investment management; Risk management Academic Discipline: Finance Supplementary Materials: Teaching Note, (208089), 8p, by Erik Stafford, Josh Coval Product Description: An abstract is not available for this product. Must be used with: (208086) Asset Allocation I. May be used with: (208087) Asset Allocation II.
Case Poorvu, William J.; Segel, Arthur I.; Lieb, Matthew C. Starwood Hotels, the world's largest REIT, is interested in acquiring an underperforming hotel in the Pacific Northwest. Steve Goldman, Starwood's VP of acquisitions and development, is wondering how much to pay for the property and how to reposition it. HBS Number: 9-800-194 Type: Case (Field) Publication Date: 2/9/2000 Revision Date: 7/26/2000 Geographic Setting: White Plains, NY Industry Setting: real estate/hotel Gross Revenues: $11 million revenues Event Year Start: 1998 Event Year End: 1998 Subjects: Acquisitions; Bankruptcy; Hotels & motels; Real estate; Real estate developments; Real estate investment
Case Perold, Andre F. Describes the events surrounding the sale of a particular large block of a thinly traded stock. Brings the situation to the point at which the seller has received an offer, and must now decide what to do. HBS Number: 9-285-041 Type: Case (Field) Publication Date: 10/30/1984 Revision Date: 6/8/1987 Geographic Setting: Baltimore, MD Industry Setting: investment advisory Event Year Start: 1984 Event Year End: 1984 Subjects: Investment management; Securities; Securities markets Supplementary Materials: Supplement (Field), (9-285-042), 4p, by Andre F. Perold
Case Author(s): Perold, Andre F. Publication Date: 10/30/1984 Revision Date: 06/08/1987 Product Type: Supplement (Field) Product Description: Supplements the (A) case. Must be used with: (9-285-041) At the T. Rowe Price Trading Desk (A). HBS Number: 9-285-042 Subjects: Investment management; Securities; Securities markets Academic Discipline: Finance
Case Greenwald, Bruce C. Describes the financing problems facing AT&T in 1983 prior to divestiture of the local telephone operating companies on Jan. 1, 1984. Leads up to the decision to issue equity, which AT&T did in early 1983 and which reduced AT&T's market value by $2 billion. The case is intended to illustrate the signalling process involved. HBS Number: 9-284-047 Type: Case (Library) Publication Date: 2/16/1984 Geographic Setting: New York Industry Setting: telecommunications Gross Revenues: $100 billion assets Event Year Start: 1981 Event Year End: 1983 Subjects: Capital structure; Divestiture; Equity financing; Financing; Telecommunications Supplementary Materials: Teaching Note, (5-292-076), 10p, by Richard S. Ruback
Case Author(s): Sharpe, William F. Publication Date: 01/01/1992 Product Type: Case (Field) Publisher: Stanford University Product Description: AT&T is considering alternative methods of selecting benchmarks for the evaluation of three equity managers. Procedures suggested by four consultants are described in some detail. HBS Number: F243 Geographic Setting: New JerseyIndustry Setting: communications industry Subjects: Communications industry; Investment management; Pension funds Academic Discipline: Finance
Case Author(s): Eisenmann, Thomas; Tempest, Nicole Publication Date: 12/04/2001 Product Type: Case (Field) Product Description: Atheros Communications is a Silicon Valley start-up that has designed a chipset for wireless local area network (WLAN) products that conform to the 802.11a standard. This offers significant performance advantages over rapidly proliferating 802.11b (WiFi) products, including a 5-fold increase in data transmission rate with fewer interference problems. Atheros has a 6- to 12-month lead over competitors developing similar chipsets. This case examines strategic challenges confronting Atheros: How can it best exploit its lead? How can it promote customer adoption of products that provide performance breakthroughs but lack backward compatibility? As a start-up with limited credibility and resources, how can it influence standards-setting processes dominated by large companies? Given short product life cycles, how should it focus future R&D efforts? Teaching Purpose: To explore barriers to customer adoption for a new product with strong network effects, to analyze competitive dynamics in an industry where standards are important, and to explore strategic challenges facing a start-up under these circumstances. HBS Number: 9-802-073 Geographic Setting: San Jose, CA Industry Setting: semiconductors Company Size: start-up Number of Employees: 140 Gross Revenues: $20 million revenues Event Year Start: 2001 Event Year End: 2001 Subjects: Business policy; Entrepreneurship; Internet; Networks; New economy; Semiconductors; Silicon Valley; Standardization; Strategy formulation Academic Discipline: Entrepreneurship
Case Feinstein, Steven; Taylor, Natalie Chronicles the mismanagement of funds by an investment management firm for a medical center's endowment and details the subsequent lawsuit. Explores fiduciary responsibility, securities litigation, mortgage-backed securities, and endowment portfolio management while providing background on the bond crisis of 1994. Teaching Purpose: Portfolio management, nonprofit management, finance, and law. HBS Number: BAB002 Type: Case (Gen Exp) Publication Date: 6/15/1999 Geographic Setting: Atlanta, GA Industry Setting: health services & investment management Event Year Start: 1995 Event Year End: 1995 Subjects: Financial services; Health organizations management; Legal aspects of business; Litigation; Nonprofit sector; Portfolio management; Securities Supplementary Materials: Teaching Note, (BAB502), 7p, by Steven Feinstein, Natalie Taylor Publisher: Babson College
Teaching Note For use with BAB002 HBS Number: BAB502 Subjects: Financial services; Health organizations management; Legal aspects of business; Litigation; Nonprofit sector; Portfolio management; Securities
Case Author(s): Piper, Thomas R. Publication Date: 07/24/1996 Revision Date: 06/15/2001 Product Type: Case (Field) Product Description: A major paper company is considering the acquisition of assets from a company that is threatened by a hostile takeover. The acquisition can be evaluated in terms of industry attractiveness, comparative advantage, and cash flow analysis. Teaching Purpose: Development of project cash flows and an appropriate rate at which to discount the cash flows. Estimation of a terminal value. Consideration of valuation methods other than discounted cash flow. HBS Number: 9-297-015 Geographic Setting: United States Industry Setting: paper Company Size: large Gross Revenues: $6.5 billion revenues Event Year Start: 1984 Event Year End: 1984 Subjects: Acquisitions; Capital budgeting; Capital costs; Financial management; Forest products; Project evaluation; Securities analysis; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-297-075), 12p, by Thomas R. Piper
Teaching Note For use with 9-297-015 HBS Number: 5-297-075 Subjects: Acquisitions; Capital budgeting; Capital costs; Financial management; Forest products; Project evaluation; Securities analysis; Valuation
Case Esty, Benjamin C.; Aronson, Tracy; Millett, Mathew Mateo Delmarva Power & Light, Inc. (Delmarva) and Atlantic Energy, Inc. (Atlantic) are neighboring electric utilities based in Delaware and New Jersey, respectively. In early 1996, they entered into merger negotiations, but were unable to re HBS Number: 9-298-034 Type: Case (Library) Publication Date: 2/13/1998 Revision Date: 12/1/1998 Geographic Setting: Delaware, New Jersey Industry Setting: electric utility Number of Employees: :4,000 Gross Revenues: $1.95 billion revenues Event Year Start: 1996 Event Year End: 1996 Subjects: Deregulation; Electric power; Mergers; Regulated industries; Risk management; Uncertainty; Valuation Supplementary Materials: Supplement (Library), (9-298-066), 2p, by Benjamin C. Esty, Tracy Aronson, Mathew Mateo Millett
Case Author(s): Leleux, Benoit; Scheel, Barbara Publication Date: 09/26/2002 Product Type: Case (Field) Publisher: IMD - International Institute for Management Development Product Description: Focuses on the history of the ATP complementary pension fund system in Denmark — its genesis and current stage of development. As a young pension fund system, it still faces large contributions relative to the amounts it has to pay out to its pensioners. But projections, both in terms of demographics and portfolio returns, indicate that the situation is rapidly going to change, and ATP had better get ready for these large outlays in the future. Describes the strategic review process entered into by ATP in January 2002, which led to the decision to increase significantly the portfolio allocations toward private equity and alternative investment vehicles — a radical move for a European pension fund manager that will transform ATP-PEP into the largest, single, private equity investor for the period 2002-2005 as it shifts its portfolio toward its target allocations. May be used with: (IMD150) ATP Private Equity Partners (C): The Scandinavian Sweetspot Strategy; (IMD149) ATP Private Equity Partners (B): Investment Strategy and Organization. HBS Number: IMD147 Geographic Setting: Denmark, Europe, global Industry Setting: pension funds Gross Revenues: 40 billion eurodollars in assets Event Year Start: 2002 Event Year End: 2002 Subjects: Asset allocation; Asset management; Assets; Equity capital; Europe; Financial services; Hedging; Investments; Pension funds; Portfolio management; Risk; Risk assessment; Scandinavia; Strategy formulation; Venture capital Academic Discipline: Finance Supplementary Materials: Teaching Note, (IMD148), 38p, by Benoit Leleux
Case Author(s): Leleux, Benoit; Scheel, Barbara Publication Date: 09/26/2002 Product Type: Case (Field) Publisher: IMD -- International Institute for Management Development Product Description: Describes the organizational issues associated with the portfolio asset allocation shifts described in the (A) case. In particular, how should the Private Equity group be organized and rewarded, what kinds of individuals should it recruit, and what kinds of investment strategies should it pursue (direct investments, coinvestments, investments in funds only)? May be used with: (IMD147) ATP Private Equity Partners (A): January 2002; (IMD150) ATP Private Equity Partners (C): The Scandinavian Sweetspot Strategy. HBS Number: IMD149 Geographic Setting: Denmark, Europe, globalIndustry Setting: pension fundsGross Revenues: 40 billion eurodollars in assets Event Year Start: 2002Event Year End: 2002 Subjects: Asset allocation; Asset management; Assets; Equity capital; Europe; Financial services; Hedging; Investments; Pension funds; Portfolio management; Risk; Risk assessment; Scandinavia; Strategy formulation; Venture capital Academic Discipline: Finance Supplementary Materials: Teaching Note, (IMD148), 38p, by Benoit Leleux
Case Author(s): Leleux, Benoit; Scheel, Barbara Publication Date: 09/26/2002 Product Type: Case (Field) Publisher: IMD -- International Institute for Management Development Product Description: Investigates the issue of gaining access to private equity investment vehicles. Although it would instantly become one of the largest private equity investors in Europe, ATP was worried it would not gain access to the most prized funds because it had not been in the business long enough and was not perceived as a trustworthy ``partner.'' To increase its visibility and possible ``worth'' to the most sought after fund managers, ATP-PEP envisioned developing a direct investment program in Scandinavia, building on its extensive network of contacts there. This access to deals and entrepreneurs in a technology-advanced region would be used as a bargaining chip to gain access to funds. May be used with: (IMD149) ATP Private Equity Partners (B): Investment Strategy and Organization; (IMD147) ATP Private Equity Partners (A): January 2002. HBS Number: IMD150 Geographic Setting: Denmark, Europe, globalIndustry Setting: pension fundsGross Revenues: 40 billion eurodollars in assets Event Year Start: 2002Event Year End: 2002 Subjects: Asset allocation; Asset management; Assets; Equity capital; Europe; Financial services; Hedging; Investments; Pension funds; Portfolio management; Risk; Risk assessment; Scandinavia; Strategy formulation; Venture capital Academic Discipline: Finance Supplementary Materials: Teaching Note, (IMD148), 38p, by Benoit Leleux
Case Author(s): Baker, Malcolm P.; Quinn, James Publication Date: 02/08/2006 Revision Date: 08/10/2006 Product Type: Case (Library) HBS Number: 9-206-023 Geographic Setting: Chicago, IL Industry Setting: Financial services Number of Employees: 1,000 Gross Revenues: $180 million revenues Event Year Start: 2004 Event Year End: 2005 Subjects: Auctions; Conflicts of interest; Financial strategy; Investment banking; Investments; IPO; Risk assessment; Underwriting Academic Discipline: Finance Product Description: Morningstar, a publisher of data and ratings for mutual fund investors, is considering an auction-based approach to the company's upcoming IPO, with management weighing the risks and benefits of the auction approach vs. a traditional underwritten offering.
Case Author(s): Jelinek, Ronald; Jelinek, Kate Publication Date: 05/15/2008 Product Type: Case (Field) Publisher: Business Horizons/Indiana University HBS Number: BH278 Subjects: Accounting; Auditing; Behavior; Conflict; Conflict management; Sarbanes-Oxley Act; Workplace Academic Discipline: Finance Product Description: Following the scandals involving Enron, WorldCom, and Qwest Communications, the accounting profession has spent the past several years trying to get back on track. While Sarbanes-Oxley may improve the decision-making of audit professionals, and help prevent future large-scale catastrophes that hurt stockholders and bring down firms, there is another problem in public accounting that few consider and nobody has proposed to solve: deviant workplace behavior. Previous research describes deviant workplace behavior as the voluntary behavior of organizational members that violates significant organizational norms and, in so doing, threatens the well being of the organization and/or its members. Building from recent work in various business literatures, this is the first research since the passage of Sarbanes-Oxley to examine workplace deviance at Big 4 accounting firms. Taking a cross-disciplinary, collaborative approach, the authors endeavor to explain why workplace deviance has infiltrated accounting firms and how it is undermining their effectiveness and derailing their long-term prospects for success. After describing its genesis and effects, the authors prescribe several managerial strategies for preventing deviance and minimizing its effects on a firm.
Case Author(s): El-Hage, Nabil N.; Fishback, Birche; Gottesman, Blake; Marino, Michael Publication Date: 07/04/2008 Product Type: Color Case HBS Number: 209010 Geographic Setting: California; United States Gross Revenues: $240 million US Event Year Start: 2004 Event Year End: 2004 Subjects: Acquisitions; Leveraged buyouts; Private equity Academic Discipline: Finance Product Description: Aurora Capital, a US Private Equity firm, contemplates whether to acquire Douglas Dynamics, the leading US maker of snow plows. Does a business that is highly dependent on the weather, and is seasonal, make a good LBO candidate? This case provides a good introduction to the LBO business. What are the characteristics of a successful LBO? And how do successful PE firms create value by acquiring such companies?
Case Author(s): El-Hage, Nabil N.; Laconi, Christopher Publication Date: 01/11/2007 Revision Date: 02/23/2009 Product Type: Case (Field) HBS Number: 207098 Geographic Setting: United States Industry Setting: Private equity Gross Revenues: $1 billion revenues Event Year Start: 2005 Event Year End: 2005 Subjects: Capital markets; Equity capital; Ownership; Private equity Academic Discipline: Finance Product Description: The founding partners of ABC, LLC, one of the leading private equity firms in the world, are trying to understand why some of the other top firms in the business, such as KKR and Apollo, have been tapping the public equity markets for their own funds, and whether they should do the same. They are also pondering how to monetize their own stake in the firm, and whether taking the firm itself public may be a viable option.
Case Author(s): El-Hage, Nabil N.; Laconi, Christopher Publication Date: 01/11/2007 Revision Date: 07/24/2007 Product Type: Case (Field) HBS Number: 9-207-098 Geographic Setting: United States Industry Setting: Private equity Gross Revenues: $1 billion revenues Event Year Start: 2005 Event Year End: 2005 Subjects: Capital markets; Equity capital; Ownership; Private equity Academic Discipline: Finance Product Description: The founding partners of ABC, LLC, one of the leading private equity firms in the world, are trying to understand why some of the other top firms in the business, such as KKR and Apollo, have been tapping the public equity markets for their own funds, and whether they should do the same. They are also pondering how to monetize their own stake in the firm, and whether taking the firm itself public may be a viable option.
Case Author(s): Esty, Benjamin C.; Ferman, Carrie Publication Date: 08/12/2002 Revision Date: 01/22/2003 Product Type: Case (Field) HBS Number: 9-203-029 Geographic Setting: Australia, Japan Industry Setting: telecom Number of Employees: 20 Gross Revenues: $100 million revenues Event Year Start: 1999 Event Year End: 1999 Subjects: Asia; Australia; Board of directors; Capital investments; Cooperatives; Corporate governance; Japan; Organizational structure; Project finance; Telecommunications industry Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-203-030), 32p, by Benjamin C. Esty, Carrie Ferman Product Description: In late September 1999, representatives from Telstri, Japan Telecom, and Teleglobe met to discuss the structure of the Australia-Japan Cable (AJC) project, a $520 million submarine cable system that would run from Australia to Japan. The sponsors, excited by the possibility of large returns, needed to move quickly to capitalize on the projected shortfall in Australia's broadband capacity. As telecommunications carriers, the sponsors needed additional capacity to serve their retail and wholesale customers. As cable system owners, they wanted to earn an appropriate return on their invested capital while mitigating ownership risks. The need to move quickly in the face of significant demand, competition, and technological uncertainty made it particularly risky to invest at this time. Teaching Purpose: Provides an introduction to project governance as well as an overview of industry data in terms of project leverage, ownership, and management. Asks students to structure an optimal governance structure for the AJC project. Students must then determine the size and composition of the project's board of directors. Finally, they must structure a compensation package that encourages senior managers to maximize s
Teaching Note For use with 9-203-029 HBS Number: 5-203-030 Subjects: Asia; Australia; Board of directors; Capital investments; Cooperatives; Corporate governance; Japan; Organizational structure; Project finance; Telecommunications industry
Case Author(s): Tiemann, Jonathan Publication Date: 03/14/1989 Revision Date: 08/05/1994 Product Type: Case (Field) HBS Number: 9-289-049 Geographic Setting: New York, NY Industry Setting: Personal care products Company Size: Fortune 500 Gross Revenues: $2.5 billion sales Event Year Start: 1988 Event Year End: 1988 Subjects: Diversification; Dividends; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-290-004), 10p, by Jonathan Tiemann; Teaching Note, (5-292-059), 10p, by Scott P. Mason Product Description: Avon Products announced both a change in its business focus and a reduction of its dividend in June 1988. To offset the likely stock price effect of the dividend reduction, Avon announced at the same time an unusual exchange offer, under which it would take up to 25% of its common stock in exchange for an unusual preferred stock. The case traces the history of Avon from 1979-88. Requires students to evaluate Avon's efforts at diversification in the early 1980s, and to relate that effort to the company's dividend history. Also requires students to evaluate an unusual security. Suitable for first-year students or for a second-year capital markets course.
Case Author(s): Perold, Andre F.; White, Lucy Publication Date: 11/08/2007 Product Type: Case (Library) HBS Number: 9-208-062 Geographic Setting: United States Industry Setting: Insurance industry Number of Employees: 4,000 (MONY) Gross Revenues: $2 billion revenues (MONY) Event Year Start: 2002 Event Year End: 2003 Subjects: Activism; Compensation; Conflicts of interest; Convertible bonds; Hedge funds; Insurance; Mergers & Acquisitions Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-208-063), 19p, by Lucy White Product Description: AXA's friendly bid for MONY is contested by activist hedge funds suspicious of management's generous change in control contracts. Votes trade after the record date. AXA financed the bid using an unusual conditionally convertible bond which may have affected incentives to trade and vote MONY shares.
Case Author(s): Jeffery, Mark; Anfield, James; Riitters, Tim Publication Date: 01/01/2006 Revision Date: 03/01/2008 Product Type: Case (Field) HBS Number: KEL149 Geographic Setting: United States Industry Setting: IT industry; Web services Subjects: Finance; Financial analysis; Internet; Return on investment; Risk assessment Academic Discipline: Finance Supplementary Materials: Note, (KEL151), 6p, by Mark Jeffery, Chris Rzymski; Teaching Note, (KEL150), 28p, by Mark Jeffery, Frederick Sy, Chris Rzymski Product Description: Should B&K Distributors implement a Web-based customer portal with an integrated marketing campaign? Asks readers to assist Jim Anfield, business development director for JDA Consulting, and Nancy O'Neil, B&K Distributor's sales VP, in determining the feasibility of this project. They must build the final ROI projections and develop recommendations for B&K's senior management team. Emphasizes the importance of assumptions and the range of possible outcomes. Based on a real-life management decision for a mid-size firm.
Teaching Note Author(s): Jeffery, Mark; Sy, Frederick; Rzymski, Chris Publication Date: 01/01/2006 Revision Date: 03/01/2008 Product Type: Teaching Note HBS Number: KEL150 Academic Discipline: Finance Product Description: An abstract is not available for this product. Must be used with: (KEL149) B&K Distributors: Calculating Return on Investment for a Web-Based Customer Portal.
Case Author(s): Light, Jay O. Publication Date: 03/26/1984 Revision Date: 08/22/1996 Product Type: Case (Library) Product Description: A U.S. manufacturing organization and a Eurobank swap fixed and floating rate obligations to reduce their financing costs. HBS Number: 9-284-080 Geographic Setting: United States, Europe Company Size: Fortune 500 Event Year Start: 1983 Event Year End: 1983 Subjects: Capital markets; Debt management; Financing; Interest rates Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-295-161), 10p, by Andre F. Perold, Wai Lee
Case Author(s): Rahnema, Ahmad Publication Date: 11/13/2000 Product Type: Case (Field) Publisher: IESE University of Navarra Product Description: In February 2000, Dutch enterprise software company Baan N.V. was in danger of being kicked out of the Amsterdam Stock Exchange's AEX index of blue chip stocks after its shareholder equity plunged to less than $10 million in the latest round of a series of management and financial crises. The Amsterdam Exchange had given Baan four weeks to improve its balance sheet or face proceedings that could lead to the de-listing of its shares. The new chief financial officer had to decide what equity financing strategy to pursue as the company sought to rebuild itself following a disastrous two years. HBS Number: IES089 Geographic Setting: Netherlands Industry Setting: Software industry Event Year Start: 2000 Event Year End: 2000 Subjects: Capital markets; Equity financing; Internet; Software; Stock exchanges Academic Discipline: Finance
Case Author(s): Christmann, Petra Publication Date: 04/03/2004 Product Type: Exercise HBS Number: UV0986 Subjects: Balance of payments; Global business Academic Discipline: Finance Product Description: This exercise defines balance of payments as a statement of a country's economic transactions with the rest of the world and explains its significance and utility, along with other essential economic terms related to understanding and calculating balance of payments. An exercise for calculating a country's balance of payments accompanies the note.
Case Author(s): Tufano, Peter; Esty, Benjamin C. Publication Date: 02/25/1994 Revision Date: 07/01/2008 Product Type: Case (Field) HBS Number: 294079 Geographic Setting: Columbus, OH Industry Setting: Commercial banking Company Size: large Number of Employees: 33,000 Gross Revenues: $4.3 billion revenues Event Year Start: 1993 Event Year End: 1993 Subjects: Derivatives; Financial management; Financial reporting; Interest rates; Liability; Risk assessment; Risk management Academic Discipline: Finance Supplementary Materials: Teaching Note, (298039), 14p, by Peter Tufano Product Description: Banc One's share price has been falling recently due to analyst and investor concern over the bank's heavy use of interest rate derivatives. Dick Lodge, chief investment officer in charge of the bank's investment and derivative portfolio, must recommend to the CEO a course of action to allay investors' fears and communicate to the market the reasons for Banc One's use of derivatives. The bank uses interest rate swaps to manage the sensitivity of its earnings to changes in interest rates and as attractive investment alternatives to conventional securities.
Case Author(s): Tufano, Peter; Esty, Benjamin C. Publication Date: 02/25/1994 Product Type: Case (Field) Product Description: Banc One's share price has been falling recently due to analyst and investor concern over the bank's heavy use of interest rate derivatives. Dick Lodge, chief investment officer in charge of the bank's investment and derivative portfolio, must recommend to the CEO a course of action to allay investors' fears and communicate to the market the reasons for Banc One's use of derivatives. The bank uses interest rate swaps to manage the sensitivity of its earnings to changes in interest rates and as attractive investment alternatives to conventional securities. Teaching Purpose: Five objectives: 1) to teach students how banks measure and control their interest rate exposure; 2) to show how derivatives, specifically swaps, can be used as synthetic investments that are an alternative to traditional investments; 3) to highlight the salient differences between traditional investments and these synthetic investments (credit, regulatory capital, financial ratios, and liquidity); 4) to understand how the use of derivatives creates a need for other risk-management strategies (basis swaps); and 5) to highlight one institution's management policies to monitor and control derivatives activities. HBS Number: 9-294-079 Geographic Setting: Columbus, OH Industry Setting: commercial banking Company Size: large Number of Employees: 33,000 Gross Revenues: $4.3 billion revenues Event Year Start: 1993 Event Year End: 1993 Subjects: Derivatives; Financial management; Financial reporting; Interest rates; Liability; Risk assessment; Risk management Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-298-039), 14p, by Peter Tufano
Case Author(s): Allayannis, Yiorgos; Shapiro, Andrew Publication Date: 10/03/2008 Product Type: Note HBS Number: UV1053 Industry Setting: Banking industry Subjects: Capital structure; Financial ratios Academic Discipline: Finance Product Description: This technical note accompanies the case titled “Suntrust Acquisition of National Commerce” and describes the various capital ratios that are commonly used in the banking sector as well as gives an example of those ratios using a hypothetical bank. It also discusses briefly Basel I and Basel II which shaped capital regulations and ratios in the banking sector.
Case Author(s): Chacko, George; Hecht, Peter; Dessain, Vincent; Sjoman, Anders; Plotkin, Adam Publication Date: 09/02/2004 Revision Date: 12/06/2004 Product Type: Case (Field) Product Description: In 2001, Bank Leu, a Swiss private bank, is considering creating the world's first public fund for catastrophe bonds. Cat bonds are securities whose payments depend on the probability of a catastrophe occurring, such as an earthquake or hurricane. Cat bonds are traditionally issued by large insurance or reinsurance companies. Outlines the traditional reinsurance market and securitization efforts that have taken place in the past and focuses on Bank Leu's decision as a buy-side participant in the cat bond market. Teaching Purpose: To explore how insurance risks can be transferred to the capital markets and how risks in general can be brokered, securitized, and traded. HBS Number: 9-205-005 Geographic Setting: Zurich, SwitzerlandIndustry Setting: bankingNumber of Employees: 600Gross Revenues: 116 million CHF revenues Event Year Start: 2001Event Year End: 2001 Subjects: Bonds; Capital markets; Europe; Financial instruments; Financing; Institutional investments; Risk management; Switzerland Academic Discipline: Finance
Case Author(s): Misawa, Mitsuru Publication Date: 11/10/2006 Product Type: Case (Field) Publisher: University of Hong Kong HBS Number: HKU601 Geographic Setting: Japan Industry Setting: Banking industry; Financial industry Subjects: Business & government; Central banks; Economic policy; Finance; Inflation; Monetary policy Academic Discipline: Finance Supplementary Materials: Teaching Note, (HKU602), 8p, by Mitsuru Misawa Product Description: The Bank of Japan's (BOJ) policy board convened for a two-day meeting starting March 8, 2006. It was expected the BOJ's Policy Board would decided to end its five-year, super-loose monetary stance, mainly because a set of predetermined conditions for terminating the quantitative easing had been met — including steady year-on-year growth in the core CPI (consumer price index). Under the quantitative easing approach, the BOJ had flooded the market with far greater amounts of liquidity than needed. A decision to end the policy meant Japan was returning to a normal monetary stance targeting interest rates after five years of pursuing an unorthodox policy designed to combat persistent deflation. The BOJ's decision was not easy. Although the law established the BOJ's independence, there was considerable opposition from the government, including Prime Minister Koizumi in particular, to an early dropping of the quantitative monetary easing. Because no major central bank had ever had such a loose-money policy, no one knew for sure how to end it smoothly.
Teaching Note Author(s): Misawa, Mitsuru Publication Date: 11/10/2006 Product Type: Teaching Note Publisher: University of Hong Kong HBS Number: HKU602 Academic Discipline: Finance Product Description: An abstract is not available for this product. Must be used with: (HKU601) Bank of Japan's Meeting in March 2006: An End to the Quantitative Easing Policy?.
Case Author(s): Martinez-Jerez, F. Asis; Miller, Katherine Publication Date: 05/04/2007 Product Type: Case (Field) HBS Number: 9-107-070 Geographic Setting: Spain Industry Setting: Banking industry Event Year Start: 2003 Event Year End: 2003 Subjects: Banking; Customer & client analysis; Customer profitability; Mortgages Academic Discipline: Finance Supplementary Materials: Supplement (Spreadsheet), (9-107-708), 0p, by F. Asis Martinez-Jerez; Teaching Note, (5-107-080), 20p, by F. Asis Martinez-Jerez Product Description: Describes how Bankinter, a mid-sized Spanish bank, altered the information set available to its customer-facing employees. In the spring of 2003, Bankinter introduced an Excel-based program called the mortgage simulator that helped branch managers calculate the price of a mortgage and estimate the customer lifetime value (CLV). Facilitates a discussion of the impact of such a change in the information set for employees when the incentives and decision rights remain unchanged. Also examines the tradeoffs front-line employees face as they divide their efforts between reaching new customers and increasing the amount of cross-selling to existing customers.
Case Author(s): Martinez-Jerez, F. Asis; Miller, Katherine Publication Date: 05/04/2007 Revision Date: 05/28/2008 Product Type: Case (Field) HBS Number: 107070 Geographic Setting: Spain Industry Setting: Banking industry Event Year Start: 2003 Event Year End: 2003 Subjects: Banking; Customer & client analysis; Customer profitability; Mortgages Academic Discipline: Finance Supplementary Materials: Supplement (Spreadsheet), (107708), 0p, by F. Asis Martinez-Jerez; Teaching Note, (107080), 20p, by F. Asis Martinez-Jerez Product Description: Describes how Bankinter, a mid-sized Spanish bank, altered the information set available to its customer-facing employees. In the spring of 2003, Bankinter introduced an Excel-based program called the mortgage simulator that helped branch managers calculate the price of a mortgage and estimate the customer lifetime value (CLV). Facilitates a discussion of the impact of such a change in the information set for employees when the incentives and decision rights remain unchanged. Also examines the tradeoffs front-line employees face as they divide their efforts between reaching new customers and increasing the amount of cross-selling to existing customers.
Teaching Note Author(s): Martinez Jerez, F. Asis Publication Date: 05/04/2007 Product Type: Teaching Note HBS Number: 5-107-080 Academic Discipline: Finance Product Description: An abstract is not available for this product.
Case Author(s): Esty, Benjamin C.; Auerbach, Jason S. Publication Date: 09/16/1997 Revision Date: 08/13/2007 Product Type: Case (Library) HBS Number: 9-298-059 Geographic Setting: United States Industry Setting: Media Number of Employees: 1,600 Gross Revenues: $800 million revenues Event Year Start: 1997 Event Year End: 1997 Subjects: Bankruptcy; Corporate governance; Liquidation; Restructuring; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-298-028), 22p, by Benjamin C. Esty Product Description: Marvel Entertainment Group is the leading comic book publisher in the United States, with superheros like Spider-Man, the Incredible Hulk, the X-Men, and Captain America. It is also one of the leading manufacturers of sports and entertainment trading cards under the Fleer and Sky Box brand names. In the mid-1990s, it experienced sharp declines in both businesses, causing it to file for bankruptcy in December 1996. This case is set in late January 1997, shortly after Marvel filed its reorganization plan with the bankruptcy court and approximately one month before creditors will have to vote on the plan at the confirmation hearing. Two of the most prominent corporate raiders of the 1980s are pitted against each other for control of the company. On one side is Ronald Perelman, who controls Marvel through his MacAndrews & Forbes holding company. On the other side is Carl Icahn, who controls 25% of Marvel's public debt. Icahn and the other bondholders must decide whether to accept Perelman's plan, to reject it in favor of their own plan, or to sell their bonds before the confirmation hearing. Perelman must decide whether to change the plan in response to the debtholders' threats or to wait and see what happens at the hearing. A rewritten version of another case.
Teaching Note For use with 9-298-059 HBS Number: 5-298-028 Subjects: Bankruptcy; Corporate governance; Entertainment industry; Liquidation; Restructuring; Valuation
Case Mason, Scott P.; Singh, Kuljot In March 1993, the management of Paribas Capital Markets is making a final review of the proposal to set up Paribas Derives Garantis (PDG), a special-purpose subsidiary of Compagnie Financiere de Paribas (CFP), that would guarantee der HBS Number: 9-295-008 Type: Case (Field) Publication Date: 9/27/1994 Revision Date: 4/24/1995 Geographic Setting: Europe Industry Setting: finance Number of Employees: :27,000 Gross Revenues: FFR 880 Event Year Start: 1993 Event Year End: 1993 Subjects: Banking; Capital markets; Derivatives; Financial management; Financial services; Investment banking; Securities
Case Author(s): Esty, Benjamin C.; Sesia Jr., Aldo Publication Date: 12/05/2002 Revision Date: 01/26/2004 Product Type: Case (Field) HBS Number: 9-203-035 Geographic Setting: Global Industry Setting: project finance/banking Event Year Start: 2002 Event Year End: 2002 Subjects: Bank loans; Banking industry; Loans; Negotiations; Project finance; Regulation; Risk assessment; Risk management; Statistical analysis Academic Discipline: Finance Supplementary Materials: Supplement (Field), (9-204-094), 5p, by Benjamin C. Esty, Aldo Sesia Jr.; Teaching Note, (5-203-055), 32p, by Benjamin C. Esty, Aldo Sesia Jr. Product Description: In June 1999, the Basel Committee on Banking Supervision announced plans to revise the capital standards for banks. The Basel Committee believed that project loans were significantly riskier than corporate loans and, therefore, warranted higher capital charges under the new proposal (known as Basel II). Bankers, fearing that higher capital charges would damage project lending by lowering profits and driving borrowers to nonbank competitors, formed a consortium to oppose the proposal by studying the actual default and loss characteristics of their combined portfolios of project loans. The study showed that project loans were not riskier than corporate loans. Armed with this data, the consortium sent a letter to the Basel Committee in August 2002 trying to convince them to lower the proposed capital charges on project finance loans. Teaching Purpose: Challenges students to examine the new capital Accord, understand the differences between project and corporate loans, and critique the statistical analysis conducted by the consortium. Students, acting as bankers, must present the data and try to convince other students, acting as Basel Committee members, to change their position on project finance loans. This case presents entirely new
Case Author(s): Cole, Shawn; Tufano, Peter Publication Date: 02/13/2007 Revision Date: 10/29/2007 Product Type: Case (Field) HBS Number: 9-207-099 Geographic Setting: India Industry Setting: Financial services Number of Employees: 917 Gross Revenues: $4 million revenues Event Year Start: 2004 Event Year End: 2004 Subjects: Banking; Emerging markets; Finance; Financial instruments; Insurance; Microcredit; Microfinance Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-208-017), 21p, by Shawn Cole Product Description: BASIX, an Indian microfinance corporation, must decide whether to continue to sell weather insurance to its clients. A brand-new financial product, weather insurance pays if measured rainfall during the growing season falls below a pre-specified limit. Mr. Sattaiah, managing director of the BASIX's bank, considers a revised insurance policy for the coming season, weighing the costs and potential risks of expanding the product against the potential benefits. May be used with: (9-207-108) BASIX Simulation Model.
Case Author(s): El-Hage, Nabil N.; Parks, Stephen Publication Date: 08/08/2007 Product Type: Case (Library) HBS Number: 9-208-036 Geographic Setting: New York Industry Setting: Private equity Number of Employees: 11 Event Year Start: 2007 Event Year End: 2007 Subjects: Arbitration; Fund raising; Litigation; Negotiations; Private equity; Reputations; Trademarks Academic Discipline: Finance Product Description: Union Square Ventures, a venture capital firm founded in 2003, filled a trademark infringement suit against Union Square Partners, a private equity firm founded in November 2006. Examines the possible impact that public litigation will have on the two firms. The impact of the litigation will be different for each firm because they are at dissimilar development stages and plan to employ distinct investment strategies. Also examines possible resolutions available to the management of the two funds.
Case Author(s): Stafford, Erik; Coval, Josh Publication Date: 11/08/2007 Product Type: Note HBS Number: 9-208-085 Event Year Start: 2007 Event Year End: 2007 Subjects: Asset allocation; Investment management; Risk management Academic Discipline: Finance Product Description: Describes a practical method for asset allocation that is more robust to estimation errors than the traditional implementation of mean-variance optimization with sample means and covariances. The Bayesian inspired Black-Litterman model is described after introducing the intuition of the Bayesian approach to inference in a univariate setting.
Case Lerner, Joshua A Vermont solid waste company seeks mezzanine financing to finance its strategy of acquiring and consolidating local competitors. The mezzanine private equity group must decide whether this investment offers an attractive risk-return tradeoff. Teaching Purpose: To illustrate the nature of mezzanine private equity investments, as well as investments in industry consolidations. HBS Number: 9-298-093 Type: Case (Field) Publication Date: 3/4/1998 Revision Date: 12/30/1998 Geographic Setting: New Jersey/Vermont Industry Setting: venture capital Number of Employees: :10 Event Year Start: 1993 Event Year End: 1993 Subjects: Entrepreneurial finance; Financial analysis; Leveraged buyouts; Venture capital; Waste disposal Supplementary Materials: Supplement (Field), (9-298-103), 2p, by Joshua Lerner; Teaching Note, (5-298-163), 11p, by Joshua Lerner
Case Crane, Dwight B.; Joseph, Penny Be Our Guest is a rapidly growing equipment rental company with substantial seasonality in its revenues and profits. In the spring of 1998, the senior management team is reviewing its financial plans in preparation for a meeting with the company's bank. The case provides an opportunity to forecast financial needs and consider the appropriate structure and amount of bank borrowing. HBS Number: 9-299-001 Type: Case (Field) Publication Date: 4/5/1999 Revision Date: 9/27/2000 Geographic Setting: Boston, MA Industry Setting: equipment rental Number of Employees: :40 Gross Revenues: $2,650,000 revenues Event Year Start: 1994 Event Year End: 1997 Subjects: Banking; Financial analysis; Financial planning; Financing; Small business
Case Author(s): Perold, Andre F. Publication Date: 11/17/1992 Revision Date: 12/16/1994 Product Type: Case (Field) Product Description: BEA's enhanced index fund product uses derivatives and cash market securities to find the most efficient way to ``track an index.'' The considerations involve transaction costs, custodial fees, witholding taxes on dividends, and fees from securities lending. In the case, BEA is faced with the task of investing an off-shore portfolio so as to track the S&P 500. The choices include buying the underlying stocks, buying an S&P 500-index-linked note, buying futures or doing an S&P 500 swap and investing in a variety of short-term fixed-income alternatives. Teaching Purpose: To discuss the use of derivatives in portfolio management, with particular emphasis on the comparative advantage enjoyed by certain investors by virtue of their tax status or country of residence, and the relative costs of investing in various instruments; to discuss the role of intermediaries in performing custom contracting for investors. HBS Number: 9-293-024 Geographic Setting: New York Industry Setting: money management Number of Employees: 109 Event Year Start: 1992 Event Year End: 1992 Subjects: Capital markets; Derivatives; Investment management; Portfolio management; Securities analysis; Securities markets Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-295-160), 16p, by Andre F. Perold, Wai Lee
Case Author(s): Raviv, Artur; Thompson, Timothy; Gresh, Phillip; Hennessy, Shannon Publication Date: 07/30/2004 Revision Date: 04/01/2007 Product Type: Case (Pub Mat) HBS Number: KEL082 Geographic Setting: United States Industry Setting: Retail industry Gross Revenues: $4.5 billion revenues Event Year Start: 2004 Event Year End: 2004 Subjects: Capital structure; Debt management; Leasing; Leverage Academic Discipline: Finance Product Description: Bed Bath & Beyond (BBBY) had no long-term debt on its balance sheet. Although many analysts considered BBBY's balance sheet a strength that permitted greater flexibility, some commented on the risks of its growing cash balance. These concerns raised questions about BBBY's capital structure. In early 2004, interest rates were at an all-time low, making it an attractive time to consider issuing debt and executing either a share repurchase or a one-time special dividend. Provides a few capital structure proposals for students to analyze.
Case Author(s): Sahlman, William A.; Janower, Andrew Publication Date: 10/02/1995 Revision Date: 07/09/2009 Product Type: Case (Field) HBS Number: 396016 Geographic Setting: New York, NY Industry Setting: Vegetable Number of Employees: 20 Gross Revenues: $2 million revenues Event Year Start: 1993 Event Year End: 1993 Subjects: Entrepreneurial finance; Entrepreneurship; Venture capital Academic Discipline: Finance Product Description: Charles Barker must decide whether to become an outside investor in a private round of financing for an early stage, high-growth-potential venture producing plastic pouring spouts for orange juice cartons. Barker must evaluate the opportunity, content, and deal to decide whether the deal makes sense for him, and whether he should recommend the investment to his clients. May be used with: (396041) Beechwood Spouts (B).
Case Sahlman, William A.; Janower, Andrew Charles Barker must decide whether to become an outside investor in a private round of financing for an early stage, high-growth-potential venture producing plastic pouring spouts for orange juice cartons. Barker must evaluate the opportunity, content, and deal to decide whether the deal makes sense for him, and whether he should recommend the investment to his clients. Teaching Purpose: To simulate the information available to the decision-making process for outside investors in private companies. May be used with: (9-396-041) Beechwood Spouts (B). HBS Number: 9-396-016 Type: Case (Field) Publication Date: 10/2/1995 Revision Date: 12/16/1996 Geographic Setting: New York Industry Setting: spouts Number of Employees: :20 Gross Revenues: $2 million revenues Event Year Start: 1993 Event Year End: 1993 Subjects: Entrepreneurial finance; Entrepreneurship; Venture capital
Case Sahlman, William A.; Janower, Andrew Eight months has passed since Barker first invested in Beechwood Spouts, and the company's situation has deteriorated. The problems appear to be resolved. Barker must now decide whether to participate in a crucial bridge financing round, without which the company will go bankrupt. Teaching Purpose: To simulate the information available to the decision-making process for outside investors in private companies. May be used with: (9-396-016) Beechwood Spouts (A). HBS Number: 9-396-041 Type: Case (Field) Publication Date: 10/2/1995 Revision Date: 12/10/1996 Geographic Setting: New York Industry Setting: spouts Number of Employees: :20 Gross Revenues: $2 million revenues Event Year Start: 1994 Event Year End: 1994 Subjects: Entrepreneurial finance; Entrepreneurship; Venture capital
Case Author(s): Baker, Malcolm P.; Sesia , Aldo, Jr. Publication Date: 02/28/2007 Product Type: Case (Field) HBS Number: 9-207-084 Geographic Setting: United States Industry Setting: Financial services Gross Revenues: $60 billion revenues Event Year Start: 2006 Event Year End: 2006 Subjects: Asset management; Behavioral finance; Investment management; Investments; Investors; Mutual funds Academic Discipline: Finance Product Description: Following a successful model in Europe, JP Morgan has introduced a set of five U.S. retail mutual funds with an investment philosophy and marketing strategy grounded in behavioral finance. The asset management group believes that understanding investor biases like overconfidence, anchoring, and loss aversion is key to generating returns on the investment side and educating clients on the advisory side.
Case Author(s): Segel, Arthur I.; Lee, Voon Siang; Tian, Jialei; Wang, Ying Laura Publication Date: 07/18/2007 Revision Date: 07/03/2008 Product Type: Case (Gen Exp) HBS Number: 208015 Geographic Setting: Beijing Industry Setting: Real estate Event Year Start: 2007 Event Year End: 2007 Subjects: Real estate; Real estate investment Academic Discipline: Finance Supplementary Materials: Teaching Note, (208016), 5p, by Arthur I. Segel, Voon Siang Lee, Jialei Tian, Ying Laura Wang Product Description: The purchase of a single-family home is generally the major investment for most young couples in China. Shows in detail the process that a young couple goes through in late April 2007 to find, finance, and close on an apartment in Beijing within what they believe to be their financial capabilities. Takes place in the context of the rapidly developing Chinese real estate market and introduces issues concerning the search and property acquisition that are specific to Beijing. Also deals with the direct and indirect cost involved in home acquisition, and compares these costs to the rental alternative. Also explores the role that the Internet can play in the home-buying process in China.
Case Chan, Su Han; Wang, Ko; Banerjee, Probir In May 1997, Beijing Enterprises Holdings Ltd., a Chinese Mainland company incorporated in Hong Kong, was in the process of raising funds for expansion of several of its subsidiaries through an initial public offering (IPO). It had als HBS Number: HKU036 Type: Case (Library) Publication Date: 1/1/1999 Geographic Setting: Hong Kong Industry Setting: conglomerate Event Year Start: 1997 Event Year End: 1997 Subjects: Asia; Capital markets; China; Conglomerates; IPO; Stock offerings; Valuation Supplementary Materials: Teaching Note, (HKU037), 13p, by Su Han Chan, Ko Wang, Probir Banerjee Publisher: University of Hong Kong (Sales restricted to North America.)
Teaching Note Author(s): Glynn, John; Spitzer, Joshua Publication Date: 09/07/2006 Revision Date: 11/09/2008 Product Type: Teaching Note Publisher: Stanford University HBS Number: E218TN Academic Discipline: Finance Product Description: An abstract is not available for this product. Must be used with: (E218) Benchmark Capital Europe: Bringing Silicon Valley Venture Capital to the Continent.
Case Sahlman, William A.; Green, Jason Addresses the challenges faced by Ben Rosen and the board of the company as continuing problems force the board to make a decision about the ongoing governance of the firm. The issues are complicated by the current CEO and founder, Rod Canion, who has had, until recently, a very successful track record and is very highly regarded within the company and the industry. Teaching Purpose: To simulate the situation a chairman of the board faces when management says one thing while outside information sources describe another. HBS Number: 9-296-002 Type: Case (Field) Publication Date: 9/11/1995 Geographic Setting: Unspecified Industry Setting: computers Number of Employees: :10,000 Gross Revenues: $3 billion revenues Event Year Start: 1991 Event Year End: 1991 Subjects: Computer industry; Corporate governance; Entrepreneurial finance; Venture capital
Case Author(s): Jayanti, Samhita; Anand, Bharat N. Publication Date: 01/20/2009 Product Type: Case (Library) HBS Number: 709449 Gross Revenues: $80 billion Event Year Start: 2008 Event Year End: 2008 Subjects: Corporate strategy; Diversification; Portfolio management Academic Discipline: Finance Product Description: Berkshire Hathaway describes the history and strategy of one of the best known investment firms over the last forty years. The case describes the investment philosophy of Warren Buffett, its legendary chairman and CEO, the gradual diversification of its portfolio, its capital allocation strategy, compensation structure, and corporate governance approach, leading up to August 2008.
Case Author(s): Lynch, Luann J Publication Date: 12/31/2008 Product Type: Supplement (Field) HBS Number: UV1026 Subjects: Banking; Finance; Insurance; Investment banking; Investments; Securities Academic Discipline: Finance Supplementary Materials: Teaching Note, (UV1025), 6p, by Brandt Allen, Luann J Lynch Product Description: This case can be used as a supplement to “Berkshire Hathaway Inc. — Intercorporate Investments (A). Students are presented with hypothetical data related to one of Berkshire Hathaway's investments and asked to compare the financial statement impacts of the investment if it is classified as an available-for-sale security with the impacts if classified as a trading security.
Case Author(s): Baker, Malcolm P.; Quinn, James Publication Date: 04/08/2005 Revision Date: 01/23/2008 Product Type: Case (Field) HBS Number: 9-205-058 Geographic Setting: Massachusetts Industry Setting: Apparel industry; Retail industry Number of Employees: 2,761 Gross Revenues: $250 million revenues Event Year Start: 2001 Event Year End: 2001 Subjects: Auctions; Comparative advantage; Leveraged buyouts; Manufacturing; Mergers & Acquisitions; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-207-029), 22p, by Malcolm P. Baker Product Description: A five-member team from Berkshire Partners must recommend a final bid and financial structure for a leveraged buyout of William Carter Co., a leading producer of children's apparel. Investorcorp, a global investment group, has put the company up for auction. Goldman Sachs, in addition to running the auction, was offering “staple-on” financing. Under this arrangement, the winning bidder would have the option to finance the deal through a prepackaged capital structure.
Case Author(s): Baker, Malcolm P.; Quinn, James Publication Date: 04/08/2005 Revision Date: 01/23/2008 Product Type: Case (Field) HBS Number: 205058 Geographic Setting: Massachusetts Industry Setting: Apparel industry; Retail industry Number of Employees: 2,761 Gross Revenues: $250 million revenues Event Year Start: 2001 Event Year End: 2001 Subjects: Auctions; Comparative advantage; Leveraged buyouts; Manufacturing; Mergers & Acquisitions; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (207029), 22p, by Malcolm P. Baker Product Description: A five-member team from Berkshire Partners must recommend a final bid and financial structure for a leveraged buyout of William Carter Co., a leading producer of children's apparel. Investorcorp, a global investment group, has put the company up for auction. Goldman Sachs, in addition to running the auction, was offering “staple-on” financing. Under this arrangement, the winning bidder would have the option to finance the deal through a prepackaged capital structure.
Case Author(s): El-Hage, Nabil N.; Baillargeon, Andre; Parks, Stephen Publication Date: 07/16/2007 Revision Date: 03/23/2009 Product Type: Case (Field) HBS Number: 208023 Geographic Setting: North America Industry Setting: Consumer electronics; Private equity Gross Revenues: $380 million revenues Event Year Start: 1999 Event Year End: 1999 Subjects: Capital structure; Investments; Mergers & Acquisitions; Private equity; Tender offers Academic Discipline: Finance Supplementary Materials: Supplement (Spreadsheet), (208701), 0p, by Nabil N. El-Hage; Supplement (Field), (208024), 7p, by Nabil N. El-Hage, Andre Baillargeon, Stephen Parks; Supplement (Field), (208025), 4p, by Nabil N. El-Hage, Andre Baillargeon, Stephen Parks Product Description: Berkshire Partners, a private equity firm in Boston, was pleased with their recent investment in the Holmes Group, a home comfort consumer electronics company. The portfolio company was exceeding key financial targets and Berkshire Partners was confident that it would be another successful investment. Holmes' management team then suggested acquiring a kitchen electronics company, the Rival Company. The management of Holmes believed that Rival would complement their existing portfolio of products and it was the perfect time to buy due to a depressed stock price caused by declining earnings. The investment team at Berkshire now had to decide if the possible returns from an investment in Rival were enough to risk the successful investment in Holmes, or if Rival could be acquired without risking Berkshire's investment in Holmes.
Case Author(s): El-Hage, Nabil N.; Baillargeon, Andre; Parks, Stephen Publication Date: 10/12/2007 Revision Date: 03/23/2009 Product Type: Supplement (Field) HBS Number: 208024 Subjects: Capital structure; Investments; Mergers & Acquisitions; Private equity; Tender offers Academic Discipline: Finance Supplementary Materials: Supplement (Field), (208025), 4p, by Nabil N. El-Hage, Andre Baillargeon, Stephen Parks Product Description: An abstract is not available for this product. Must be used with: (208023) Berkshire Partners: Purchase of Rival Company (A).
Case Author(s): El-Hage, Nabil N.; Baillargeon, Andre; Parks, Stephen Publication Date: 10/12/2007 Revision Date: 03/23/2009 Product Type: Supplement (Field) HBS Number: 208025 Subjects: Capital structure; Investments; Mergers & Acquisitions; Private equity; Tender offers Academic Discipline: Finance Product Description: An abstract is not available for this product. Must be used with: (208023) Berkshire Partners: Purchase of Rival Company (A); (208024) Berkshire Partners: Purchase of Rival Company (B).
Case Author(s): Hardymon, G. Felda; Lerner, Josh; Leamon, Ann Publication Date: 05/05/2004 Revision Date: 10/11/2007 Product Type: Note HBS Number: 9-804-176 Subjects: Decision making; Entrepreneurial finance; Investments; Organizational behavior; Partnerships; Venture capital Academic Discipline: Finance Product Description: Describes investment decision-making processes, based on interviews with 56% of the top 38 venture capital firms in the country. Discusses some implications for the future growth of the industry.
Case Author(s): Edleson, Michael E. Publication Date: 03/23/1992 Revision Date: 11/17/1993 Product Type: Case (Gen Exp) Product Description: A manager of a small investment company has been successfully using index funds for limited market timing. Growth has allowed her to move into picking stocks. She is considering two small and highly variable listed stocks, but is concerned about the risk that these investments might add to her “portfolio.'' Provides a lead-in to the CAPM. Students learn about total risk, non-diversifiable or portfolio risk, and (CAPM) beta, and calculate variability of the stocks separately, and portfolio variance with and without the stocks, to see how an extremely risky (but low-beta) stock actually reduces risk; and calculate stock betas. HBS Number: 9-292-122 Geographic Setting: Unspecified Industry Setting: investment management Company Size: small Event Year Start: 1991 Event Year End: 1991 Subjects: Cost benefit analysis; Diversification; Efficient markets; Investment management; Portfolio management; Regression analysis; Risk assessment Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-294-113), 10p, by Michael E. Edleson
Case Author(s): Hardymon, G. Felda; Lerner, Josh; Leamon, Ann Publication Date: 02/25/2003 Revision Date: 03/01/2005 Product Type: Note Product Description: Introduces the issues attendant to valuing privately held portfolios and distributing thinly traded stock. Although they have existed since the beginning of the formal venture capital industry, they have received increasing amounts of attention as the money invested in private equity has grown. Presents the perspectives of the many participants in the industry. Teaching Purpose: To introduce students to the issues of valuation and distribution in a private equity setting. HBS Number: 9-803-161 Subjects: Distribution; Entrepreneurial finance; Stocks; Valuation; Venture capital Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-805-049), 12p, by Josh Lerner, G. Felda Hardymon, Ann Leamon
Case Author(s): Hardymon, G. Felda; Lerner, Josh; Leamon, Ann Publication Date: 02/25/2003 Revision Date: 02/21/2008 Product Type: Note HBS Number: 803161 Subjects: Distribution; Entrepreneurial finance; Stocks; Valuation; Venture capital Academic Discipline: Finance Supplementary Materials: Teaching Note, (805049), 12p, by Josh Lerner, G. Felda Hardymon, Ann Leamon Product Description: Introduces the issues attendant to valuing privately held portfolios and distributing thinly traded stock. Although they have existed since the beginning of the formal venture capital industry, they have received increasing amounts of attention as the money invested in private equity has grown. Presents the perspectives of the many participants in the industry.
Case Author(s): Tufano, Peter; Moel, Alberto Publication Date: 02/03/1997 Revision Date: 09/15/1997 Product Type: Case (Field) HBS Number: 9-297-054 Geographic Setting: Peru Industry Setting: Mining, metal & mineral industries Number of Employees: 51,000 Gross Revenues: $10 billion revenues Event Year Start: 1996 Event Year End: 1996 Subjects: Bids; Capital budgeting; Mining; Privatization; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-298-102), 19p, by Peter Tufano, Alberto Moel Product Description: In June 1996, executives of the multinational mining company RTZ-CRA contemplate bidding to acquire the Antamina copper and zinc mine in Peru. The Antamina project is being offered for sale by auction as part of the privatization of Peru's state mining company. RTZ-CRA has to determine what the mine is worth and decide whether and how it should bid in the upcoming auction. The bidding rules put in place by the Peruvian government dictate that each company's bid contain two components: an up-front cash amount and an amount the bidder will invest to develop the property if development is warranted after further exploration is completed. May be used with: (9-297-055) Copper and Zinc Markets — 1996; (9-203-083) Antamini Simulation Model.
Case Author(s): Reiling, Henry B.; Camargo, Maria M. Publication Date: 12/05/2003 Product Type: Case (Gen Exp) Product Description: During a weekend social event, a company president learns of an attractive investment tenuously connected to his firm's line of business. Is this a corporate opportunity? Teaching Purpose: Give experience analyzing a possible corporate opportunity situation. HBS Number: 9-204-104 Geographic Setting: Nantucket, MassachusettsIndustry Setting: home furnishingsNumber of Employees: 3 Event Year Start: 2003Event Year End: 2003 Subjects: Furniture; Investments; Legal aspects of business; Partnerships Academic Discipline: Finance
Case Author(s): Piper, Thomas R. Publication Date: 06/03/1986 Revision Date: 05/15/1989 Product Type: Case (Gen Exp) Product Description: A senior loan officer is reviewing the recent performance of a company that has failed to repay its loan as scheduled. The failure results from a cyclical downturn in sales, coupled with a lag in cutting back production. Inventory risk is minimal. This case is an updated version of Cutrite Shears. HBS Number: 9-286-021 Geographic Setting: United States Industry Setting: durable goods Company Size: small Gross Revenues: $20 million sales Event Year Start: 1983 Event Year End: 1983 Subjects: Financial analysis; Financial planning; Loan evaluation; Tools Academic Discipline: Finance
Case Gompers, Paul A.; Tsai, Alexander Examines the decision to go public. BioTransplant is an early stage biotechnology company that must decide how to finance its research and development. The pros and cons of public offerings are analyzed versus alternative financing sources. HBS Number: 9-297-095 Type: Case (Field) Publication Date: 3/24/1997 Geographic Setting: Charlestown, MA Industry Setting: biotechnology Number of Employees: :75 Gross Revenues: $10 million revenues Event Year Start: 1996 Event Year End: 1996 Subjects: Biotechnology; Entrepreneurial finance; Long term financing Supplementary Materials: Teaching Note, (5-299-055), 20p, by Paul A. Gompers
Case Author(s): Perold, Andre F. Publication Date: 11/20/1984 Product Type: Note Product Description: Contains a program that can be used on the HP12C pocket calculator to compute the Black-Scholes option price and the associated hedge ratio. The program must be given the following parameters: the exercise price, the risk-free rate, the time to expiration, and the price and volatility of the underlying stock. HBS Number: 9-285-057 Subjects: Investment management; Option pricing; Software Academic Discipline: Finance
Case Author(s): Luehrman, Timothy A. Publication Date: 10/08/2009 Product Type: Case Publisher: Harvard Business School Publishing HBS Number: 4040 Geographic Setting: United States Event Year Start: 2007 Subjects: Finance; Capital structure; Financial strategy Academic Discipline: Finance Supplementary Materials: Case Teaching Note, (4041), 18p, by Timothy A. Luehrman,Joel L. Heilprin; Spreadsheet Supplement, (4052), 0p, by Timothy A. Luehrman,Joel L. Heilprin; Spreadsheet Supplement, (4055), 0p, by Timothy A. Luehrman,Joel L. Heilprin Product Description: Topics Include: Corporate Finance, Interest Tax Shields, Capital Structure, Financial Strategy, Stock Repurchase and Kitchen Tools A diversified mid-sized manufacturer of kitchen tools contemplates a stock repurchase in response to an unsolicited takeover. The company must determine the optimal debt capacity and capital structure, and subsequently estimate the resulting change in firm value and stock price. Attention is also given to the value of interest tax shields.
Case Author(s): Khanna, Tarun; Palepu, Krishna; Bullock, Richard J. Publication Date: 10/04/2007 Product Type: Case (Field) HBS Number: 9-708-448 Geographic Setting: India Industry Setting: Private equity Number of Employees: 9 Event Year Start: 2007 Event Year End: 2007 Subjects: Emerging markets; Investments; Portfolio management; Private equity Academic Discipline: Finance Product Description: Examines the strategy and experience of Indian private equity firm Blue River Capital. Blue River was established in 2005 to invest primarily in middle market, particularly family-run, businesses in India. Blue River caters to this niche as an active investor, providing capital and working with portfolio companies to improve their corporate governance. Describes the challenges faced by Blue River in identifying investments, performing due diligence, and working with portfolio companies and asks how Blue River should build itself into a top-tier private equity fund, particularly as more and more foreign firms target the growing Indian market.
Case Author(s): Khanna, Tarun; Palepu, Krishna; Bullock, Richard J. Publication Date: 10/04/2007 Product Type: Case (Field) HBS Number: 708448 Geographic Setting: India Industry Setting: Private equity Number of Employees: 9 Event Year Start: 2007 Event Year End: 2007 Subjects: Emerging markets; Investments; Portfolio management; Private equity Academic Discipline: Finance Product Description: Examines the strategy and experience of Indian private equity firm Blue River Capital. Blue River was established in 2005 to invest primarily in middle market, particularly family-run, businesses in India. Blue River caters to this niche as an active investor, providing capital and working with portfolio companies to improve their corporate governance. Describes the challenges faced by Blue River in identifying investments, performing due diligence, and working with portfolio companies and asks how Blue River should build itself into a top-tier private equity fund, particularly as more and more foreign firms target the growing Indian market.
Case Author(s): Pulvino, Todd Publication Date: 06/05/2001 Product Type: Case (Gen Exp) Product Description: A set of four exercises that teach compounding interest and valuing bonds. Teaching Purpose: To teach the mechanics of valuing bonds. HBS Number: 9-201-101 Subjects: Bonds; Financial instruments; Interest rates; Present value; Valuation Academic Discipline: Finance
Case Bethel, Jennifer E.; Winton, Michael Requires students to value Boston Beer's IPO. Set in Boston in 1995, Jim Koch, the founder of Boston Beer, must determine the appropriate price for his firm's stock in its IPO. HBS Number: BAB026 Type: Case (Library) Publication Date: 1/1/1996 Revision Date: 6/14/2000 Geographic Setting: Boston, MA Industry Setting: beer Gross Revenues: $128 million revenues Event Year Start: 1995 Event Year End: 1995 Subjects: Beverages; Capital structure; Equity financing; Financing; IPO; Valuation Supplementary Materials: Supplement (Library), (BAB027), 4p, by Jennifer E. Bethel, Michael Winton Publisher: Babson College
Case Author(s): Bethel, Jennifer E.; Winton, Michael Publication Date: 01/01/1996 Revision Date: 11/20/2002 Product Type: Supplement (Library) Publisher: Babson College Product Description: Supplements the (A) case. Must be used with: (BAB026) The Boston Beer Co. (A). HBS Number: BAB027 Subjects: Beverages; Capital structure; Equity financing; Financing; IPO; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (BAB000), 8p, by Jennifer E. Bethel, Michael Winton
Case Author(s): Poorvu, William J.; Vogel, John H., Jr. Publication Date: 02/14/1995 Revision Date: 09/13/1995 Product Type: Case (Field) Product Description: Michael Bourland, the president of the Bourland Companies, needs to refinance two properties, an office building in Southern New Hampshire and a retail property in Massachusetts. He is considering three alternatives: a renewal of a bank mini-perm, a 15-year mortgage from an insurance company, and a new securitized loan offered by the Bank of Boston. The case focuses on issues related to mortgage securitization and how it stacks up against other products in the market. Also raises issues about family real estate businesses. Teaching Purpose: Mortgage securitization is a growing and important part of the real estate industry. This case provides a basis for learning about securitization and discussing the implications for the real estate industry. HBS Number: 9-395-151 Geographic Setting: Massachusetts and New Hampshire Industry Setting: real estate Number of Employees: 15 Gross Revenues: $5 million revenues Event Year Start: 1995 Event Year End: 1995 Subjects: Banking; Capital markets; Long term financing; Mortgages; Real estate Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-396-145), 9p, by William J. Poorvu, John H. Vogel Jr.
Case Author(s): Esty, Benjamin C.; Kane, Michael Publication Date: 01/09/2001 Revision Date: 01/30/2003 Product Type: Case (Field) HBS Number: 9-201-054 Geographic Setting: United Kingdom Industry Setting: oil & gas Company Size: Fortune 500 Number of Employees: 100,000 Gross Revenues: $68 billion revenues Event Year Start: 1999 Event Year End: 1999 Subjects: Capital budgeting; Capital expenditures; Cost benefit analysis; Mergers; Natural resources; Petroleum; Project finance; Risk management Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-202-089), 38p, by Benjamin C. Esty; Teaching Note, (5-202-086), 36p, by Benjamin C. Esty Product Description: Following the BP/Amoco merger in December 1998, CFO David Watson asked Bill Young to recommend when and in what circumstances the firm should use external project finance instead of internal corporate funds to finance new capital investments. As part of this assignment, Young and his team must review each firm's current policy regarding project finance and evaluate the various rationales used to justify its use. Following this review, his team created a new policy statement recommending that BP Amoco finance capital expenditures using corporate funds except in three special circumstances. The three exceptions were: mega projects, projects in politically volatile areas, and joint ventures with heterogeneous partners. Whether the general rule of using corporate funds and whether the specific exceptions to the rule are appropriate for the merged entity are subjects for class discussion. Teaching Purpose: Illustrates the integration of two finance groups following a merger and the subsequent attempt to create a new policy statement regarding the use of project finance. Intended to serve as an introduction to the field of project finance and to generate a discussio
Teaching Note For use with 9-201-054 HBS Number: 5-202-086 Subjects: Capital budgeting; Capital expenditures; Cost benefit analysis; Mergers; Natural resources; Petroleum; Project finance; Risk management
Case Author(s): Esty, Benjamin C.; Kane, Michael Publication Date: 01/08/2001 Revision Date: 01/30/2003 Product Type: Case (Library) HBS Number: 9-201-067 Geographic Setting: United Kingdom Industry Setting: oil & gas Company Size: Fortune 500 Number of Employees: 100,000 Gross Revenues: $68 billion revenues Event Year Start: 1999 Event Year End: 1999 Subjects: Capital budgeting; Capital expenditures; Cost benefit analysis; Mergers; Natural resources; Petroleum; Project finance; Risk management Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-202-089), 38p, by Benjamin C. Esty; Teaching Note, (5-202-086), 36p, by Benjamin C. Esty Product Description: British Petroleum and Amoco were the two largest members of the Azerbaijan International Oil Consortium (AIOC), an 11-firm consortium that was spending $10 billion to develop oil fields in the Caspian Sea. As of march 1999, AIOC had completed a $1.9 billion development project known as Early Oil. The two companies, however, had financed their shares of this project in different ways: BP used internal funds (traditional, on-balance sheet corporate finance) while Amoco was one of five AIOC partners that raised $400 million of project finance. Following the BP/Amoco merger in December 1998, managers in the combined firm's finance group had to reassess the Early Oil financing strategy and determine the best way to finance its share of the $8.0 billion Full Field Development Project. Should it use internal funds, project finance, or a mixture of the two? Teaching Purpose: Serves as an introduction to project finance and illustrates the challenges of developing large-scale projects in emerging markets. Allows students to apply BP Amoco's newly created policy statement on the use of project finance to an active investment. The objective is to illustrate why firms u
Teaching Note For use with 9-201-067 HBS Number: 5-202-086 Subjects: Capital budgeting; Capital expenditures; Cost benefit analysis; Mergers; Natural resources; Petroleum; Project finance; Risk management
Case Author(s): Hardymon, Felda; Lerner, Josh; Leamon, Ann Publication Date: 02/09/2006 Revision Date: 06/11/2007 Product Type: Case (Field) HBS Number: 9-806-069 Geographic Setting: United States Industry Setting: Private equity; Restaurant industry Number of Employees: 25 Event Year Start: 2004 Event Year End: 2004 Subjects: Finance; Leveraged buyouts; Negotiations; Partnerships; Pricing; Private equity; Stock offerings Academic Discipline: Finance Product Description: Randall Fojtasek, a partner at Brazos Private Equity Partners, must decide whether to invest more money in Cheddar's restaurant chain, which the firm invested in 10 months earlier. The incremental investment would fund a real estate subsidiary that would own the property on which Cheddar's built its stores, rather than its traditional approach of sale and leaseback. As he considers the issue, Fojtasek must decide how to price the new stock, how to structure the deal to limit his firm's dilution, and how to manage the personality issues involved.
Case Author(s): Lerner, Joshua; Hardymon, G. Felda; Leamon, Ann Publication Date: 02/15/2002 Revision Date: 02/19/2004 Product Type: Case (Field) Product Description: The partners of a new mid-market buyout fund are working on a buyout of a closely held modular building company. Although originally structured as a stock deal, they have realized that an asset deal would be preferable from their point of view and are trying to determine what benefits it might hold for the sellers, whose continuing involvement in the company is essential for success. This case describes the process of the deal's due diligence and the state of the LBO industry in the early 21st century. Teaching Purpose: To introduce students to LBO deal structures and to valuation techniques. HBS Number: 9-202-090 Geographic Setting: TexasIndustry Setting: private equityNumber of Employees: 6 Event Year Start: 2001Event Year End: 2001 Subjects: Leveraged buyouts; Negotiations; Recapitalization; Valuation Academic Discipline: Finance
Case Author(s): Fenster, Steven R.; Park, Andrew S. Publication Date: 02/19/1993 Revision Date: 10/29/1993 Product Type: Case (Library) Product Description: The Brent Walker Group completed the largest out-of-court restructuring in the United Kingdom. After overexpansion in the 1980's, the company pursued a large acquisition financed with debt and then encountered falling asset prices. With the assistance of The Bank of England, the company reached an accommodation with its lenders involving deferral of interest and conversion of debt to equity. Teaching Purpose: Examines the out-of-court restructuring environment in the United Kingdom. Presents the negotiating challenges faced by the company's creditor classes and portrays the distinct roles of management, shareholders, and directors in U.K. restructuring. Studied in comparison with U.S. restructuring practices, the situation provides an interesting example of an international reorganization. HBS Number: 9-293-078 Geographic Setting: United KingdomIndustry Setting: leisure/gambling Event Year Start: 1990Event Year End: 1922 Subjects: Bankruptcy; Capital structure; International banking; International finance; Restructuring; United Kingdom Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-294-080), 9p, by Steven R. Fenster
Teaching Note For use with 9-293-078 HBS Number: 5-294-080 Subjects: Bankruptcy; Capital structure; International banking; International finance; Restructuring; United Kingdom
Case Author(s): White, Lucy Publication Date: 11/07/2007 Product Type: Case (Library) HBS Number: 9-208-064 Geographic Setting: United Kingdom Industry Setting: Real estate Number of Employees: 697 Gross Revenues: $500 million in revenues Event Year Start: 2003 Event Year End: 2003 Subjects: Activism; Conflicts of interest; Corporate governance; Hedge funds; Real estate; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-208-065), 28p, by Lucy White Product Description: British Land's shares traded below NAV. Laxey investments tried to force British Land into share buybacks and criticized its corporate governance. Laxey voted borrowed shares at the AGM.
Teaching Note Author(s): White, Lucy Publication Date: 11/13/2007 Product Type: Teaching Note HBS Number: 5-208-065 Academic Discipline: Finance Product Description: An abstract is not available for this product. Must be used with: (9-208-064) British Land.
Case Author(s): Segel, Arthur I.; Katzin, Joshua A. Publication Date: 03/16/2005 Revision Date: 05/23/2006 Product Type: Case (Field) Product Description: In September, 2004, Stephen Lebowitz, President of CBL, a $6 billion publicly traded shopping mall real estate investment trust (REIT) with over 70 million square feet, is considering acquiring 170 acres for a new retail development at a racetrack site in Southern New Hampshire. First, Stephen has to calculate the value of the land to make his bid based on current market conditions and local zoning. Next, Stephen has to consider how the public securities markets will react, good and bad, to a shopping center REIT doing a new development at this time. HBS Number: 9-205-085 Geographic Setting: Nashua, NH Industry Setting: Entertainment industry; Real estate developments Event Year Start: 2004 Event Year End: 2004 Subjects: Decision making; Investments; Real estate; Real estate investment Academic Discipline: Finance
Case Author(s): Gilson, Stuart C.; Herrero, Gustavo A. Publication Date: 09/17/2001 Revision Date: 11/10/2004 Product Type: Case (Field) HBS Number: 9-202-009 Geographic Setting: Buenos Aires, Argentina, Brazil Industry Setting: soft-drink beverage manufacturing & distribution Number of Employees: 7,000 Gross Revenues: $700 million revenues Event Year Start: 1998 Event Year End: 1998 Subjects: Acquisitions; Bankruptcy; Beverages; Financial management; Multinational corporations; Reorganization; Restructuring; South America; Valuation Academic Discipline: Finance Product Description: In 1998, BAESA, PepsiCo's largest bottler and distributor outside North America, experienced severe financial difficulty and had to restructure its debt and business operations to avoid bankruptcy or liquidation. Based in Argentina, with operations throughout South America, the company had for years been a spectacular success story and media darling, until it undertook an ill-fated expansion in Brazil. The company's debt was owed to banks and financial institutions in South America, Asia, Europe, and the United States. In addition, the company had $60 million of publicly traded bonds, much of them held by U.S. investors. The restructuring was the largest and most complicated undertaking of its kind ever taken in South America. In addition to negotiating with its bankers and making a public exchange offer for its bonds, the company made a massive common stock rights offering to its shareholders, giving them the opportunity to purchase new stock in the company. It also considered filing a “prepackaged” Chapter 11 bankruptcy in the United States to pressure U.S. bondholders to go along with the plan. The negotiations were greatly complicated by differences in the bankruptcy laws of Argentina, Brazil, and the United States. Teaching Purpose: To illustrate how dis
Case Author(s): Segel, Arthur I; Poorvu, William J.; Ginsburgh, Justin ; Kessler, Richard Publication Date: 06/18/2009 Revision Date: 10/07/2009 Product Type: Case (Gen Exp) Publisher: Harvard Business School HBS Number: 209154 Geographic Setting: Illinois Event Year Start: 2009 Subjects: Debt management; Leasing; Restructuring; Real estate investments; Market analysis; Sales strategy Academic Discipline: Finance Supplementary Materials: Case Teaching Note, (210031), 23p, by William J. Poorvu, Arthur I Segel, Richard Kessler, Justin Ginsburgh Product Description: Busse Corporate Center's largest tenant recently declared bankruptcy, leaving the building 38% occupied and significantly overleveraged. In a depressed suburban Chicago office market, Marisa Sanchez, the leasing agent, has to negotiate lease proposals with three prospective tenants to try to fill the vacant space. Meanwhile, the building's owner, Collins Properties, must decide with its equity partner whether to continue funding the building's losses while trying to lease the vacant space, restructure the debt, or default on the loan and turn the building over to its lenders. The decision is made more complicated by Collins' use of a Commercial Mortgage Backed Security (CMBS) Loan, which involves multiple parties, ambiguous relationships, and bifurcated responsibilities.
Case Author(s): Piper, Thomas R. Publication Date: 10/31/1991 Revision Date: 01/04/2002 Product Type: Case (Field) Product Description: The Butler Lumber Co. is faced with a need for increased bank financing due to its rapid sales growth and low profitability. Students must determine the reasons for the rising bank borrowing, estimate the amount of borrowing needed, and assess the attractiveness of the loan to the bank. A rewritten version of an earlier case. Allows students to practice ratio analysis, financial forecasting, and evaluating financing alternatives. HBS Number: 9-292-013 Geographic Setting: United States Industry Setting: retail lumber Company Size: small Number of Employees: 11 Gross Revenues: $3 million revenues Event Year Start: 1991 Event Year End: 1991 Subjects: Financial analysis; Financial planning; Forecasting; Loan evaluation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-292-014), 9p, by Thomas R. Piper
Case Author(s): Luehrman, Timothy A.; Regan, Andrew D. Publication Date: 11/19/1992 Revision Date: 05/26/1993 Product Type: Case (Field) Product Description: Less than a year after completing a leveraged buyout of their own company, the managers of BW/IP International were presented with an attractive acquisition candidate. To buy the target company, however, BW/IP would have to borrow more money and take on more administrative problems at a time when its managers are already very busy. The case asks students to consider how BW/IP can convince its lenders that the acquisition is a good idea. Presents two straightforward valuation exercises. Also permits a careful comparison of the capital allocation processes at a large, low-leveraged, public company, versus a small, highly-leveraged, private company. HBS Number: 9-293-058 Geographic Setting: California Industry Setting: pumps Company Size: mid-size Gross Revenues: $250 million revenues Event Year Start: 1988 Event Year End: 1988 Subjects: Capital budgeting; Financial management; Loan evaluation; Machinery; Reorganization; Securities analysis; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-295-147), 14p, by Timothy A. Luehrman
Case Author(s): Sahlman, William A.; Perkins, Caroline Publication Date: 09/25/2006 Revision Date: 07/22/2009 Product Type: Case (Field) HBS Number: 807057 Geographic Setting: United States Industry Setting: Media Number of Employees: 100 Gross Revenues: $10 million revenues Event Year Start: 2002 Event Year End: 2006 Subjects: Business growth; Credit; Developing countries; Entrepreneurial finance; Entrepreneurial management; Entrepreneurship; Marketing; Venture capital Academic Discipline: Finance Product Description: Describes a set of financing issues confronting a rapidly growing company that uses “Word of Mouth” marketing techniques in promoting research, new products, or services. The company proposes to set the terms for a new round of venture capital it needs and to have venture capitalists bid for the right to invest on those terms by proving that they can add value to BzzAgent, Inc.
Case Author(s): Sahlman, William A.; Perkins, Caroline Publication Date: 09/25/2006 Revision Date: 09/18/2007 Product Type: Case (Field) HBS Number: 9-807-057 Geographic Setting: United States Industry Setting: Media Number of Employees: 100 Gross Revenues: $10 million revenues Event Year Start: 2002 Event Year End: 2006 Subjects: Business growth; Credit; Developing countries; Entrepreneurial finance; Entrepreneurial management; Entrepreneurship; Marketing; Venture capital Academic Discipline: Finance Product Description: Describes a set of financing issues confronting a rapidly growing company that uses “Word of Mouth” marketing techniques in promoting research, new products, or services. The company proposes to set the terms for a new round of venture capital it needs and to have venture capitalists bid for the right to invest on those terms by proving that they can add value to BzzAgent, Inc.
Case Author(s): Subramanian, Guhan; Sherman, Eliot Publication Date: 07/05/2007 Revision Date: 05/05/2008 Product Type: Case (Field) HBS Number: 908004 Geographic Setting: New York Industry Setting: Telecommunications industry Number of Employees: 1,200 Event Year Start: 2004 Event Year End: 2004 Subjects: Acquisitions; Auctions; Bankruptcy; Group dynamics; Negotiations; Telecommunications Academic Discipline: Finance Supplementary Materials: Supplement, (908703), 20 min, by Guhan Subramanian; Supplement, (908704), 20 min, by Guhan Subramanian Product Description: Describes the auction of Cable & Wireless America (CWA), a bankrupt subsidiary of the British telecommunications company Cable & Wireless. While an initial “stalking horse” bid valued the assets at $125 million, after a long day and night of bidding between eight groups, the best bid was in the high $60 million range. The sell-side team, comprised of bankers from the Blackstone Group and Greenhill, and lawyers from Wachtell Lipton and Kirkland & Ellis, is forced to regroup and reconsider their options for galvanizing the bidding process. Describes these events in detail, while providing information for students on CWA's history, the nature of Section 363 auctions, and the bidders who were involved in the process.
Case Gompers, Paul A.; Reitz, Howard Firestone Describes the decision facing Danny Lewin, Jonathan Seelig, and Tom Leighton, the founders of Cachet Technologies, an MIT spin-out. The firm has done poorly in the annual MIT business plan competition and the founders have to decide whether to continue. HBS Number: 9-200-031 Type: Case (Field) Publication Date: 1/25/2000 Revision Date: 3/6/2000 Geographic Setting: Boston, MA Industry Setting: Internet Number of Employees: :3 Event Year Start: 1998 Event Year End: 1998 Subjects: Entrepreneurial finance; Internet; Venture capital
Case Author(s): Greenwood, Robin; Scharfstein, David Publication Date: 10/20/2005 Revision Date: 09/14/2006 Product Type: Note HBS Number: 9-206-028 Subjects: Cash flow; Financial statements Academic Discipline: Finance Product Description: Outlines the mechanics of calculating free cash flows from historical and proforma financial statements. Focuses on the mechanical process of transforming numbers from financial forecasts into cash flows.
Case Author(s): Light, Jay O.; Lorsch, Jay W.; Sailer, James E. Publication Date: 07/10/1991 Revision Date: 08/17/2000 Product Type: Case (Field) Product Description: Examines California Public Employees Retirement System (CalPERS), the world's fourth largest pension fund. Dale Hanson, CEO of CalPERS, has a problem; how does he use CalPERS' influence as the holder of a small percentage of 1,300 American companies to put pressure on corporate America to achieve better returns for shareholders? The case discusses the constraints which confront CalPERS as a quasi-state agency and describes their efforts to improve corporate governance to date. May be used with: (9-201-091) California PERS (B). HBS Number: 9-291-045 Geographic Setting: Sacramento, CA Gross Revenues: $62 billion assets Event Year Start: 1991 Event Year End: 1991 Subjects: Corporate governance; Investment management; Pension funds; State government; Stockholders Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-295-004), 8p, by Jay O. Light, James E. Sailer; Teaching Note, (5-499-051), 2p, by Jay W. Lorsch
Teaching Note For use with 9-291-045 HBS Number: 5-499-051 Subjects: Corporate governance; Investment management; Pension funds; State government; Stockholders
Teaching Note Author(s): Light, Jay O.; Sailer, James E. Publication Date: 07/01/1994 Product Type: Teaching Note HBS Number: 5-295-004 Academic Discipline: Finance Product Description: Teaching Note for (9-291-045). Must be used with: (9-291-045) California PERS (A).
Case Author(s): Light, Jay O.; Lorsch, Jay W.; Sailer, Jam Publication Date: 02/05/2001 Product Type: Case (Field) Product Description: The largest state pension fund continues the evolution of its approach to corporate governance contemplating "relationship investing" and other new approaches. May be used with: (9-291-045) California PERS (A). HBS Number: 9-201-091 Geographic Setting: Sacramento, CAIndustry Setting: pension funds Event Year Start: 1993Event Year End: 2000 Subjects: Corporate governance; Investment management; Pension funds; State government; Stockholders Academic Discipline: Finance
Case Author(s): Esty, Benjamin C.; Kane, Michael Publication Date: 05/19/2001 Revision Date: 01/21/2003 Product Type: Case (Field) HBS Number: 9-201-098 Geographic Setting: California Industry Setting: electric utilities Gross Revenues: $600 million revenues Event Year Start: 1999 Event Year End: 1999 Subjects: Capital expenditures; Corporate strategy; Deregulation; Electric power; Financial strategy; Organizational structure; Project finance; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-201-121), 33p, by Benjamin C. Esty, Michael Kane; Teaching Note, (5-202-086), 36p, by Benjamin C. Esty Product Description: In early 1999, Calpine Corp.'s CEO Pete Cartwright adopted an aggressive growth strategy with the goal of increasing the company's aggregate generating capacity from approximately 3,000 to 15,000 megawatts (MW) by 2004. He believed there was a fleeting opportunity to repower America given the inefficiency and age of current generating capacity as well as the recently granted ability to compete in wholesale power markets. To achieve the new goal, Calpine will have to build or acquire as many as 25 power plants at a total cost of $6 billion (approximately $500,000 per 1,000 MW). For a company with assets of $1.7 billion, a subinvestment grade debt rating, a debt-to-capitalization ratio of 79%, and an after-tax cash flow of $143 million in 1998, raising this much money was going to be a formidable challenge. Teaching Purpose: Describes what project finance is, how it differs from corporate finance, and why firms use it to finance capital investments. Also illustrates the profit opportunities in the U.S. power industry created by changes in technology and regulation and the importance of adapting a company's financial strategy to support a new, high-growth competitive strategy designed to capture these flee
Teaching Note Author(s): Esty, Benjamin C. Publication Date: 04/30/2002 Revision Date: 02/13/2003 Product Type: Note HBS Number: 5-202-086 Subjects: Capital investments; Corporate governance; Economic development; Emerging markets; Financial strategy; Financing; International finance; Project finance; Risk management Academic Discipline: Finance Product Description: Large-Scale Investment is a case-based course about project finance for second-year MBA students. Project finance involves the creation of a legally independent project company financed with nonrecourse debt for the purpose of investing in a single-purpose industrial asset. In 2001, firms financed almost $220 billion worth of capital expenditures through project companies, an amount that has grown and will continue to grow rapidly in the years ahead. The central theme of the course is that “structure matters,” which stands in sharp contrast to the neoclassical view of the firm as a “black box” production function and the assumption underlying Modigliani and Miller's first irrelevance proposition that financing and investment are separable and independent activities. Through this course, students learn how various aspects of project structure affect managerial incentives to create value and manage risk. Ultimately, students learn how to increase value through both investment and financing choices. This note describes the course's key themes, structure, and content. Designed for educators interested in teaching a course on project finance. The material described in this note can also be used to create a module in an existing course on corporate finance, international finance, or financial institutions or to create courses on emerging market corporate finance, risk management, and energy finance.
Case Gompers, Paul A.; Conneely, Catherine Jim Sims tries to close the deal to create Cambridge Technology Partners (CTP) in a spin-out from a troubled technology consulting firm. The deal looks tenuous. HBS Number: 9-298-044 Type: Case (Field) Publication Date: 8/14/1997 Revision Date: 11/23/1998 Geographic Setting: Cambridge, MA Industry Setting: information technology/consulting Company Size: start-up Number of Employees: :200 Gross Revenues: $16 million revenues Event Year Start: 1991 Event Year End: 1991 Subjects: Consulting; Entrepreneurial finance; Information technology; Venture capital Supplementary Materials: Teaching Note, (5-299-057), 12p, by Paul A. Gompers
Case Gompers, Paul A.; Conneely, Catherine Concerns the decision of Jim Sims, president and CEO of Cambridge Technology Partners (CTP) to form a corporate venture capital subsidiary. CTP is a fast-growing information technology consulting firm that has been presented with many investment opportunities from clients and employees. HBS Number: 9-297-033 Type: Case (Field) Publication Date: 3/24/1997 Revision Date: 1/8/1999 Geographic Setting: Cambridge, MA Industry Setting: information technology/consulting Gross Revenues: $87 million revenues Event Year Start: 1996 Event Year End: 1996 Subjects: Consulting; Entrepreneurial finance; Information technology; Venture capital Supplementary Materials: Teaching Note, (5-299-056), 13p, by Paul A. Gompers
Case Author(s): Moss, David; Bolton, Cole Publication Date: 12/20/2007 Product Type: Case HBS Number: 708037 Industry Setting: Banking industry Subjects: Business & government; Business history; Government; Laws & regulations; Politics Academic Discipline: Finance Product Description: The New York State Legislature had come to a standstill in 1829 as lawmakers refused to charter any new banks or recharter any existing banks. Four of New York's forty banks had failed since 1825, and many legislatures believed that a significant change in the banking regime was needed to shore up the state's financial systems. Others, however, feared that a major change in the law was too risky, especially since over three-quarters of the state's banks held charters that were slated to expire over the next four years. On the table was a completely untested proposal to create a mandatory public insurance fund that would back the banknotes and deposits of every state bank. As bank charters throughout New York State rapidly approached expiration, lawmakers faced a tough decision: should they pass the bill and gamble with the untried insurance fund, or should they go seek a more traditional solution to the state's banking woes?
Case Author(s): Poorvu, William J.; Segel, Arthur I.; Douglas, Camille Publication Date: 10/22/2002 Revision Date: 08/03/2004 Product Type: Case (Field) Product Description: It was September 25, 2002 and Peter Anderson was due to meet with Morgan Stanley in ten minutes. Anderson had been the finance director of Canary Wharf Group (CWG) since Paul Reichmann and a group of investors had repurchased Canary Wharf in 1995. Anderson had joined Olympia & York in 1989 to finance Canary Wharf and had struggled through the bankruptcy of the project and its parent company, Olympia & York. He had stayed with Reichmann through those difficult years and worked with him to buy back the project from the banks. Largely due to Anderson's ability to raise the capital necessary for Canary Wharf to fund its growth, the project was now universally acclaimed as hugely successful. Anderson had now invested over half his professional life in Canary Wharf and he was anxious to find a solution to the conflicting objectives of the CWG. Teaching Purpose: To teach student
