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Apogee Corp. has approached your firm for $250,000 in funding.

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Problem #1;Apogee Corp. has approached your firm for $250,000 in funding. You have been asked to;evaluate their request and make recommendations.;Apogee is a relatively young firm that: has reached cash flow breakeven, has been experiencing;strong early growth levels, and needs the funds to fund its continuing expansion. The firms;industry has been experiencing very strong growth and its total market is expected to peak in;the $25-30 million range.;Evaluate the situation and make your investment recommendations.;Problem #2;Smith Corp. has approached your firm for $800,000 in funding. You have been asked to;evaluate their request and make recommendations.;Smith Corp. has been a solid performer over the past 5 years. It has a record of: steady, though;modest, growth, steady profitability, and stable and sufficient internally generated cash flows.;While not a high flyer, it has been a consistent performer.;The firms industry is in the latter growth stages and is composed of about 100 firms. Most of the;firms are fragmented with modest market shares with the exception of Mansfield Corp, which;has a market share of about 50%. Firms in the industry have increased their market share by;addressing new customers from the markets growth.;Smith Corp. has developed a prototype of a very promising new product. They believe the new;product is superior to the one presently offered by Mansfield Corp. and believe it will take;market share from Mansfield. The requested funding will be used to finalize the new product, to;create appropriate production facilities, to fund early production, and to initiate & support a;marketing program.;Evaluate the situation and make your investment recommendations.;Problem #3;Sunnyside Corp. has approached your firm for $1.2 million in funding. You have been asked to;evaluate their request and make recommendations.;Sunnyside produces high precision valves used by customers as the components in the;manufacture of high quality, high value industrial machinery. Sunnyside enjoys a strong;reputation for quality in the industry and has a solid performance track record. Growth has been;steady but controlled and the firm produces a steady, stable, and reasonably sufficient;internally-generated cash flow.;Sunnysides production is capital intense, with high fixed costs. Its technology is continually;updated and changes are needed to stay ahead of competitors and meet continuing customer;needs. Orders tend to be large and periodic with an approximate 1 month lead time. Products;are quasi-customized and produced to order. The firm typically produces a core product and;then customizes it (adding features) for the particular order.;Sunnyside markets using direct sales and has a very stable customer base of about 60;customers. It relies on repeat business and has not aggressively added new customers. Of its;customers, two account for about 60% of the business and their needs have been important;drivers of the business and solid sources of cash flows.;The firm anticipates increasing growth over the next 4 years. However, its production facilities;which are highly efficient and a source of material cash flow, are very close to capacity. And its;plant space is already fully utilized. While the firm periodically uses increased shifts to respond;to order flow, it anticipates the needs for a production expansion thus the funding request.;Prepare an evaluation of the strengths & weaknesses of the firm, and specify the concerns and;considerations for any investment.

 

Paper#28637 | Written in 18-Jul-2015

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