Carlton Polish Case

Carlton Polish

What is the polish/cleaning supplies market like? (Size, market structure, segmentation, demand among customers and distributors)

The cleaning services and supplies for industrial and institutional consumers was a market of over $4.5 billion. The market is broken down into three segments which are: “independent distributors of cleaning supplies, contract cleaning firms, and manufacturers of cleaning supplies who sold direct to end users” (3). Carlton Polish was within a segment considered sales of chemical supplies within this $4.5 billion industry. This chemical supply industry accounted for about 20% of the market. Sales of chemical supplies were not affected by economic cycle because consumers did not stop cleaning facilities even if a recession hit. Distributors of the chemical products sold private label products that competed with Carlton Polish

What is your assessment of the Carlton Polish and why? (Strategy, profitability, balance sheet, pro forma

Carlton Polish has a strong brand name which helps in its selling by distributors. The distributors push Carlton’s products because the firm teaches the distributors more about the Carlton products. Carlton’s Selling, general and administrative is rather high; accounting for over 30% of the Sales. As well, executive summaries account for 10% of Sales. Executive salaries should not increase 10% each year along with sales especially if one of the two executive salaries will be eliminated by this proposal of sale.

What is Carlton Polish worth? (Perform valuation using discounted cash flows, use discount rate 14.4%, what is the enterprise value, and equity value?)

The enterprise value of the firm is $6.3 million with a equity value of $5 million. The valuations are based on a growth of 6% after the 5-year outlook. The 5 year outlook had a 10% increase per year so a reduction is needed because the 10% increase would not be viable forever. The equity value of $5 million is with nothing...