MicroStrategy Incorporated: PIPE Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

In mid-June 2000, Michael Saylor, CEO of MicroStrategy, is considering an investment of $ 125 million of convertible preferred stock in his company a group of private investors, including Citadel Investment Group LLC. The proposal comes at a difficult time for the company, as only three months ago, its shares reached a record price of $ 300 per share. At that time, the company was registered in the $ 1 billion experienced supply of capital. Soon after, the company was forced to state their income, after a conflict with the U.S. Securities and Exchange Commission (SEC) for its revenue recognition practices. Although the recount did not change the cash flow position of the company, it was a result of the SEC investigation and cancellation of its shares. In order to meet the ambitious plans Saylor MicroStrategy, additional funding should be obtained. With the public and market sources of funding off, students should evaluate what the best course of action for the company at this time. Students were asked to evaluate a new form of venture capital called private investment in public enterprises (pipe). PIPES differ from conventional floating rate convertible that conversion price in most cases can be adjusted downward. The case was heard as the pros and cons of these investments.
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by Susan Chaplinsky Source: Darden School of Business 18 pages. Publication Date: January 7, 2002. Prod. #: UV0275-PDF-ENG