Commercial Fixtures, Inc. is a lighting fixture company that started 25 years ago by the fathers of the two present partners. These present partners are experiencing differences which cannot be reconciled. Thus, they planned to conduct a bid auction for one partner to buy out the other.
Michael J. Roberts
Harvard Business Review (393115-PDF-ENG)
March 15, 1993
Case questions answered:
- What is most important about the situation of Commercial Fixtures, Inc.?
- What is most important about the situation of Whitlock?
- If you are Whitlock, what will you bid?
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Commercial Fixtures, Inc. Case Answers
This case solution includes an Excel file with calculations.
It is important to note that while the three valuation techniques used in this case give a rough estimate of the value of a company, these methods are not always necessarily precise.
As Gordon states, book net assets help establish business worth, but it is often adjusted to “reflect differences between the market values of assets and the depreciated values shown in balance sheets.”
Basically, a business can have a different value to different people and sometimes includes personal and subjective aspects.
What is most important about the situation of Commercial Fixtures, Inc.?
Commercial Fixtures, Inc.’s product marketing strategy is to find niches in the marketplace that no other manufacturers can fill.
The managerial issues and disagreements between Whitlock and Evans were evident to the employees and affected the company and its culture at all levels.
CFI obtained their new plant at an excellent price. Whitlock believed it to be worth $200,000 more than the stated book value.
Conflict in leadership between the directors had a significant impact on employees and Commercial Fixtures, Inc.’s culture.
What is most important about the situation of Whitlock?
Whitlock has an engineering degree coupled with an MBA, which would be very lucrative in the job market.
Due to his relationship with the bank, they would…
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