Fvc Valuation

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Date Submitted: 10/31/2010 03:32 AM

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FVC Valuation

As Bill Flinder neared retirement, the idea of selling FVC to a bigger firm seemed almost necessary. He had a good top management team, but he didn't think anyone of them could step in and run the show alone. He found stability in the RSE International combination that was worth something to him. In the increasingly global marketplace with more

costly development, FVC needed a deep pocketed partner to expand and to bankroll more research. Flinder believed that the company would also benefit from gaining access to a large marketing and distribution network. As the company continued to grow, it would need to gain product know-how for high-volume manufacturing. Flinder Valves did not have this kind of expertise. Finally, they had been an increasing trend of consolidation in Flinder Valves’ industry over the last year. Flinder feared that without a well-financed partner, the company would be swamped by competition. He was intrigued with the possibility that Flinder Valves might be more fully valued if it were part of a larger, more diversified enterprise. Thus, when the merger opportunity with RSE International Corporation came along in 2007, Flinder determined to make it work as best as he could.

Flinder believed that FVC had alternatives to this deal. Lockheed-Martin Corporation, a large defence contractor (or at any of a number of others), might be induced to make an offer for Flinder Valves, although Flinder preferred RSE International Corporation as a merger partner. FVC and RSE might establish a joint venture of some sort, though slender suspected the joint ventures faced the same kinds of integration problems as the requisitions; as a result, he thought joint ventures were inferior alternative. FVC could move forward alone, but that would require raising large sums of new debt and equity to finance the rapid expansion of the firm’s "widening gyre" program. Flinder was concerned that he might lose voting control of the firm...