Midwest Lighting

Tutorial 7: “Midwest Lighting”

Preparation Questions

Students are asked to consider the following questions:

1. Evaluate the company. How much do you believe the company is worth? Bring to class a written bid of how much you would pay for it if you were Scott and Peterson.

2. What should they do to resolve the ownership situation?

3. How would you finance the purchase of the company?

4. Assume you do purchase the company. What specific actions would you plan to take on the first day? By the end of the first week? By the end of six months? Explain how and why.

The basic questions are: What should Peterson and Scott do? What are their alternatives? How can they resolve the current conflict? What other issues and considerations should they address? How could a purchase of the business be financed? What is the business worth to each of them?

The class should be divided into four groups, one representing Peterson, one Scott, and two representing the Big 6 accounting firm which Burke works for. Each should prepare for a 20 minute meeting to take place between the advisors and the partners in which they will try to resolve the problem facing Midwest Lighting. The end result will be two meetings between the advisors and the two owners of MLI.

Positioning and Objectives

The case comes at the end of the section on Financing Entrepreneurial Ventures as it examines a company which has already been around for a number of years and therefore has a financial history and assets against which a bank can potentially lend.

What is the Number 1 problem facing Midwest Lighting?

Getting the conflict between Peterson and Scott resolved. What are the options Peterson and Scott have to resolve the conflict?

* One sell to the other.

* Both sell.

* Divide the company.

* One of them become a silent partner.

* One sell to a new partner.

* Add a third partner.

* Liquidate.

* Hire a general manager.

* Status quo....