Question

1. You recently opened a natural foods company that specializes in organic ingredients sourced from farms just a few hours away from your factory. Sales have been surprisingly brisk, and a very large company wants to purchase 50 percent of your company for $25 million. The problem? Your potential investor is one of the largest snack foods companies in the world and doesn't much care for your organic, natural image. Would you accept the offer or not, and why?

Answer 1

With the provided output such as farms being nearest to the factory, company having a reputation for specialized in organic ingredients, investor who is interested in buying the firm doesn't care for the organic reputation or the other way that he's not willing to pay off goodwill probably, also last but not least the investor is a strong opponent and a competitor who can pull off the other 50% of firm after acquiring the proposed 50% of firm, one wouldn't want to accept if the firm valuation is worth more than a $25 million. Company's valuation, mission, vision, integrity, reputation of organic and natural image, and also factory located nearby the source should be considered while evaluating the offer to be accepted or not. Sales could be slow for one time to another, but losing the entire enterprise value to some competitor wouldn't solve the problem, unless there is a consistent drop in the sales and revenue growth or the company is in distress. New companies could face lot of problems in the starting years but with the right amount of cash and goodwill it can always push it's limits off and can pull itself to the growth stage of a company. Thus, we would decline the offer under the assumptions that the offer might have been lower than the valuation, sources located to the factory and a good image and reputation that the company started to earn.