Optitech Case Study Q1: We recommend Jim to follow the growth of his company via the acquisition strategy

because it will provide his company with the immediate growth and increase the market share. Jim has started the company from his parents garage and raise the $50MM company with his innovative ideas and hard work. His company is at the position where they have the opportunity to grow and become one of the benchmark companies in the mature toner cartridge manufacturing Industry. But the competition is intense and to compete against the companies like Xerox they need the high financial support. This financial support can only come with the help of acquisition with the opportunity for Jim to continue as the CEO of the company and contribute to the growth. Q2: The process to evaluate Optitech used by Shields and Company is quite elaborative starting with the Industry overview based on the Porter Five Forces followed by the financial assessment of the company, discussion with possible valuation of risks and finally providing with the strategic alternatives by considering the key scenarios for future success of the company. The methodologies used are guideline company analysis that compares Optitech with the public company of similar operations but, was the data compared reliable? Precedent transaction analysis that compares company price paid for the similar company and its financial performance but the public data on past transactions can be sometimes limited and misleading; specific dilution analysis that evaluate the effect of the transaction on shareholder value and to check whether EPS for buying shareholders will increase or decrease post-deal. And lastly they used the discounted cash flow analysis that depends upon the future cash flows, which can sometimes lead to erroneous decision. DCF method is directly related to whether one can predict the future cash flows accurately or not. Q3: Jim is facing a dilemma that every entrepreneur has to face at some point where growth of the company becomes a main problem. He needs to make a best decision that will affect his whole life. He needs to choose from the options to sell the company or grow through personal expense and acquisition. At this moment growing through acquisitions make sense because the industry is very mature and to competition is very intense. The company has the right opportunity and the team and they just need the resources. Q4: The company valuations should be optimal and precise because the future of an entrepreneur depends upon the recommendations and it seems like that Shield have provided Optitech with the detailed picture of their competencies and strength in order to take an apt decision. The most important factor that we will consider while choosing an investment banker is that they should have the industry experience. In the case of Optitech, Shields have the already a similar experience with Lexmark. Secondly, the company that could provide with the best team because synergy is the fundamental and since we are going to be spending a substantial amount of time with the banker we wont be able to trust them if there is no good understanding. Furthermore, an investment banker should have the negotiating experience that can be very handy while closing the deals. A good investment banker should always provide a safe exit strategy where it is crucial for a risk-taking entrepreneur in a mature market industry. Deepak DANG 1 ENPC EMBA6