Metapath Case Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Metapath Case Case Study Solution

3). Strategic Choice

After analyzing the case, it can be determined that, Metapath should accept the offer given by Cell tech.It planned to acquire Metapath for $115 million, which was a generous offer considering Metapath’s market positioning and revenues stream amounting to $25.6 million annually. It can be evaluated that, the acquisition could significantly benefit Metapath, as it would allow the company to use the already established sales, distribution and marketing infrastructures of Cell tech to reach its clients which, in turn, could decrease its sales & marketing costs, enabling the company to use the existing operational SOPs of Celltech to further decrease its operational cost through operational synergies. Moreover, it can be assessed that, Celltech and Metapath were relatively alike in which, both companies targeted the relatively similar clients and were considering to engage globally. Similarly, it would enable the company to decrease the amount of convertible preferred shares given to RSC, which they could later convert to common stocks in case of liquidation and enable RSC to recover the entire amount of principal invested and gain a significant return on its investment, if the valuation of Metapath increased in the future. Therefore, it can be determined that, the acquisition would benefit Metapath in more ways than one way. It would induce synergies between the corporations, allowing Cell tech to enhance its stock price in the market, which was already on the rise from $15 per share to $19-$20 per share and it was expected to climb even more in the future. This would enable Meta path to increase its share in the market and better align itself with its own future strategic objectives of initiating its own IPO in the market, better enabling themselves to generate significant investment from potential investors in the form of stock purchased, allowing the company to invest heavily on its research and development project. This would enable them to gain a competitive edge over its competitors, ensuring its long-term survival in the market.

Metapath Case Harvard Case Solution & Analysis

4). Metapath Cash flow Problems

Metapath was facing a serious issue regarding its cash flows in its 6th year, post series E investment. This compelled the exiting investors to divest prematurely from their investments. Additionally, it can be assessed that, the only offer available was an additional investment of $40 million at $20 million pre with pay-to-play, participating preference liquidation was imposed with the condition that, the management would stay for a period of two years. Therefore, to mitigate the adverse situation and attract or hold the investors, the CEO should first, identify the core issues causing the decline in cash flows generated and provide quick remedial actions to mitigate the adverse effects of declining cash flows or try and gain additional investments from existing or new investors to fulfill the cash flow requirement of the company. This could increase the investors’ confidence in their investment, expanding their investment period. Which would give the company sufficient time to implement a proper fix for its cash flow problems. Furthermore, the CEO should identify key investors or shareholders of the company and hold negotiations with these key investors.....................

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