Honest tea case study analysis

CASE QUESTIONS: ENTREPRENEURIAL FINANCE General Instructions: Unless instructed otherwise, please answer all questions concisely and accurately on no more than two pages. Case #1 Feed Resources Recovery 1. What is your assessment of the business for the short and long term? Please be specific and state your reasoning. 2. Please give 3 reasons as to why venture capitalists are interested in the overall sector. 3. If you were a venture capitalist, would you invest now in Feed? Why or Why Not? What would you change your mind? 4. Whom should Shane and Ryan approach for financing and how would you prioritize the order between family & friends, angels, the government, customers, and others you can think of? Case #2 PunchTab 1. Now that he is raising capital for his second business, how is Kamara’s situation different now versus when he was starting YousendIt? What are the three primary reasons? 2.Please name three qualities that would make an ideal angel investor for PunchTab? 3.Why does Sturiale say that deal terms (e.g., valuation, % ownership) are irrelevant? Is that what determines how wealthy an entrepreneur will be? What is meant with that statement? 4.What should Kamaran do? (1) Raise seed with VC; (2) Raise with angels; or (3) Skip seed investment and raise Series A? Case #3 How Much and From Whom? 1. How much capital should be raised over the next 5-year period? 2. What are the funding sources to be targeted and amounts to be requested from each during the 5-year period. 3. What is the selling proposition (i.e. the investment thesis) for each round. Case #4 Next Generation Middle School 1. What is the point of this case? 2. List the 3 major challenges facing Leschly and Schleck. 3. Was there knowledge of finance and willingness to take risk demonstrated? If so describe. Case #5 Honest Tea 1. How is Honest Tea doing? Give me SPECIFICS. 2. What does Honest Tea need to do to become a successful company? 3. How was the past financing structured between the founders and why? 4. Whom should Goldman and Nalebuff explore for financing in the current round? 5. Does the current proposed valuation by Goldman make sense and why? Why might it be on the high side? (Use P/E and P/S ratios with the data given for other companies in the industry.) 1 Case #6 Trendsetter 1. Compare AND discuss 3 differences between the two offered term sheets. 2. Discuss and recommend the term sheet that you would select and explain why. Case #7 Butler Lumber 1. Why does BL need to borrow money to support its profitable business? Draw up a Fund Flow Statement, i.e., Funding and Uses a. Funding would include Bank Borrowing, Trade Credit, Retained Earnings, Cash, Accrued Expenses b. Uses would include Inventories, A/R, Buyout, Reduction in debt, increase in fixed assets/accounts 2. Will the bank credit of $465,000 be sufficient to fully meet the company’s requirements at least over the next year? Why or why not? What does it depend on? 3. How attractive is it for BL to take the trade discount? How much do you really save from taking advantage of it per year? Case #8 Carlton Polish Teaching 1. What is the polish/cleaning supplies market like? (Size, market structure, segmentation, demand among customers and distributors) 2. What is your assessment of the Carlton Polish and why? (Strategy, profitability, balance sheet, pro forma financials). 3. What is Carlton Polish worth? (Perform discounted cash flow valuation, use discount rate 14.4%, to calculate enterprise value, and then equity value?). Why is this not a true reflection of the value of the company to Charlie Carleton? 4. What should Charlie Carlton do? (Should he buy or sell?) What would you do? Case #9 The Boston Beer Company 1. How would you say Boston Beer is doing? What are the sources of its competitive advantage? How sustainable is its competitive advantage? 2. Why has Boston Beer chosen a dual class share structure for its IPO? What are the implications for a dual-class structure for investors? 3. How does Boston Beer’s consumer subscription approach compare to a firmcommitment offering through a syndicate of investment banks? 4. How much would you be willing to pay for a share of Boston Beer? What are your assumptions, and what is the sensitivity of the valuation to those assumptions? What are the major risks? 2 Entrepreneurial Finance-Grading Outline for Case & Article Evaluations Poor Basis of awarded points 0 to 6 Fair Good Excellent 7 8 9 to 10 Description of Case evaluated Description of case evaluated does not cover ANY of the points relevant to this class. Limited or confusing description of case. Good description of case evaluated. Comprehensive/excellent description of case evaluated. Critique of case & article No critique / discussion of the case or article. Limited, superficial or confusing critique / discussion. Good critique / discussion. Sophisticated and in-depth critique / discussion of the case or article. No summary statement.