Q: Remaining Independent
Pros,
The management and culture of the company remain the same, and by keeping full control on the strategies of the company, there is a chance that company will have extensive growth in future. The management also has full control over the employment of the employees, which results in a great amount of growth.
Cons,
The management will struggle to finance the growth strategies as there will be not enough investment into advertisement and research which will result in decrease in sales and net income. Due to the lack of outside business experience, Nantucket Nectars will eventually lose its competitive advantage over its competitors.
Q: Going Public
Pros,
The company will have full access to the capital market.The management and culture of the organization also remain the same that will increase transparency and confidence for your customers.There is complete liquidity for your employees and freedom to follow organizational culture.The stock in the company can be used in part to finance acquisitions of other companies. Moreover, the shareholders are able to diversify their investment portfolios, due to the increase in marketability of their shares.
Cons,
There is high risk involved that the company can lose its culture by focusing on the short-term goals, as there will be management problems as the managers have to report to shareholders and that will have negative impact on the sales and marketing strategies of the company. There will be numerous legal regulations and constraints to follow and one has to spend lot of time with the investment bankers and lawyers.
(Chemmanur)
Q: Selling the Company
Pros,
If one chooses a buyer wisely, then they should get a great amount of investment that will be nefitowners to invest the proceeds to another business such as in IT business due to its growth and profitability. This will help the owners to maximize their values and exposure.In addition, the company would be in hands of more professional and experienced managers who would make effective strategies like growth strategy, advertisement and marketing strategy and promoting the good organizational culture which will accelerate the growth of the company.
Cons,
It will be expected that there will be new management as well as there will be implementation of new strategies which could affect the operation of the company. In addition to this, there will be an opportunity that new culture will arise as well as there is a chance that the employees would resist new culture and will leave the company. In addition, if the employee turnover increases then there will be a chance that Nantucket Nectars may lose its competitive advantage on its competitors such as Pepsi and Coke.
Potential Buyer
It is expected that the management of the company is facing certain problems with respect to expansion policies as the founders wondered what to do with the company. If they decide to proceed with sales,then they should know how to handle the negotiations in order to maximize the price. Tom Scott and Tom First considered on how to structure the potential transaction. They both believed strongly in the upside potential of their company however, they were also concerned about holding the stock of a different company. Therefore, a question arises as if they should negotiate the best cash deal possible without a long-term management responsibility or should they negotiate for acquirer?
It is expected that selling Nantucket Nectars to the strategic buyer would help Tom Scott and
Tom First in order to generate cash and in order to reduce the risk that the management of the company is expecting due to the increase in competition as the strategic buyer would provide both financial support and managerial support. Moreover, it is also expected that it would also help the company towards the next frontier of growth. (Damodaran, November 2006)
Recommendation
IPO is the best option to choose and stick on to it, as it will provide instant financing to support the growth strategies and there will be in crease in transparency and confidence for your customers. Due to this, the company would obtain in creased prestige and visibility.
The company’s failure to sell juices through supermarkets has resulted this situation; although company has tried how ever it has failed to acquire more space for its shelves from these supermarkets and in order to compete with competitors it has also made the decision to sell the company.......
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