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Compagnie d'équipements électroniques

Author: Remmers, H. Lee INSEAD Area: FinancePublisher: Fontainebleau : INSEAD, 1997.Language: FrenchDescription: 12 p.Type of document: INSEAD CaseAbstract: In early 1994, senior managers and major shareholders of Sté Lambert, a medium sized privately French company distributing automotive components, decided to put their company up for sale. Two of its major suppliers (CEE and MCE) were interested in buying it to increase their own market shares. The tow suppliers were competitors, neither wanting the other to gain more market share by buying Lambert. Lambert's management had recently over-invested in new facilities which greatly increase debt; for tax reasons, they had been "milking" the company with the result that its apparent earnings were low. Several valuation methods besides a DCF approach are being considered by both the buying and selling companiesPedagogical Objectives: The case requires an analysis of the target company's "true" performance and financial position, an estimate of future cash flows - growth, an overhaul of its working capital and financial structure, and an assessment of the suppliers' relationships after sale to one or the other potential buyer. The discount rate must also be estimated, complicated because there are no publicly traded companies in the sector to provide a benchmark. Spreadsheet software on Excel is avaible to help students make a valuation. The cases lend themselves to a negotiation exercise where the two potential buyers would each try to strike a deal with the sellers.
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The case requires an analysis of the target company's "true" performance and financial position, an estimate of future cash flows - growth, an overhaul of its working capital and financial structure, and an assessment of the suppliers' relationships after sale to one or the other potential buyer. The discount rate must also be estimated, complicated because there are no publicly traded companies in the sector to provide a benchmark. Spreadsheet software on Excel is avaible to help students make a valuation. The cases lend themselves to a negotiation exercise where the two potential buyers would each try to strike a deal with the sellers.

In early 1994, senior managers and major shareholders of Sté Lambert, a medium sized privately French company distributing automotive components, decided to put their company up for sale. Two of its major suppliers (CEE and MCE) were interested in buying it to increase their own market shares. The tow suppliers were competitors, neither wanting the other to gain more market share by buying Lambert. Lambert's management had recently over-invested in new facilities which greatly increase debt; for tax reasons, they had been "milking" the company with the result that its apparent earnings were low. Several valuation methods besides a DCF approach are being considered by both the buying and selling companies

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