Company Valuation

In: Business and Management

Submitted By arsalanasif
Words 1504
Pages 7

Company Valuation
[Name of writer]
[Name of institute]

Company Valuation

Introduction This is the case of a partnership business, Midwest Lightning Inc. (MLI) partnered between two entrepreneurs Jack Peterson and David Scott. Over the years these two partners have developed differences, which have escalated to the point of separation. Hence, in this assignment we are going to provide solution that would be required as the partnership culminates.

Overview of the case The partners of the company Midwest Lightning have over the years developed differences and they are now at complete 180 degrees when it comes to their views about the business. The solution that has been suggested is that the partnership should end as the differences have become irreconcilable. In the course of separation, various issues have now arisen, regarding the valuation of the company and how much worth each partner should be accrued in the event of separation.

1) Evaluation of the company-Buy and Sell bids Allen Burke, the accountant of Jack Peterson and David Scott suggested a bid agreement. The agreement finalised was that both owners had agreed on the signing of a mutual buyout agreement. The agreement mentioned that the owners were to submit a secret bid in relation to what the other owner’s half of the business should be. The partner that would offer the maximum price would then buy out the share of other partner.
A minimum bid that was established was at $ 500,000.
The bids would comprise of two parts: the first part would be made up of cash payment and the other part would be of a five year non competition agreement.

Buy and sell bid Scott Peterson
Cash $ 523,000 $ 550,795
Non-competition agreement (PV)* $ 192,146 $ 236,278
Adjusted purchase price $ 715,146 $ 787,073

Annual payments over five…...

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