OUTLINE FOR A CASE ANALYSIS Dapper Textiles Ltd Business And Finance Homework Help

OUTLINEFOR A CASE ANALYSIS

For this finance project there is aBusiness case example that needs to be read and analyzed. The outline for thecase analysis is printed towards the bottom of the short story. Ones donereading the short story please answers the questions in the Outline for a CaseAnalysis. Make sure to put just the headliners for each of the questions 1-7.This must be in APA format and be 3 ½ pages long. Please let me know if thisproject will work for you.

 Dapper Textiles Ltd.

Dapper Textiles is a business created through a managementbuy-in. The business was originally a subsidiary of a larger firm and it wassold off to raise funds for a new venture about 10 years ago. Threeentrepreneurs, an accountant and two experienced textile business owners, wereapproached by the original owner to see if they were interested in the deal. Atthe time, the business had a turnover of about $1 million per year with pre-taxprofits of $100,000 and a workforce of 10 long-term employees. The firmspecialised in high-quality, low-volume, customised curtain production. In manycases, these were one-off designs for the heritage/conservation market. Thebusiness was offered for sale at $500,000. The price – equal to five timescurrent profits – appeared high but it did include the freehold of the oldtraditional production site in the north of England plus the business had areasonable and stable forward order book. The prospective management team wereinterested but could not raise the $500,000 asking price. Indeed, the threeinvestors could only collectively manage $60,000. As a result, funding for thedeal was sourced from the private equity market. The funding was secured from aprivate equity fund that targeted buy-in or buy-out deals. They acquired 88% ofthe equity (and the right to appoint two non-executive directors) based on afive-year business plan for diversification and business growth which included:The development of an off-the-shelf range of products to build on the firm’sheritage reputation. This would include curtain manufacture as well asassociated household furnishings. A doubling in the firm’s export sales.Improved production quality and flexibility achieved through investment in newproduction and design capabilities. Diversification into direct sales via amail order operation and a factory shop on site. At least a five-fold rise inpre-tax profits after five years. The transformational change in the planshould have created a business with a value in excess of $2.5 million by yearfive, when the management team envisaged an exit from the investment would beachieved through on-sale. The funding agreement also included strict objectivesaround management costs and fees. Although two of the three directors had atrack record in delivering a plan of this scale before, all three of the buy-inteam would have a large part of remuneration linked to growth and businessperformance and eventual sale. Ten years on and Dapper Textiles continues totrade. The buy-in appears to have done a very good job in delivering theoriginal plan and going beyond that phase into one of further growth. However,the original private equity deal proved to be only the start of a number ofphases of external finance raising and activity to achieve the goal. In yearone, the main emphasis was on revamping the existing production line with newtooling and equipment to allow both production quality to be increased and toprepare the factory for diversification of the product range. The firm wasacquired debt-free with a freehold on the site and a largely unutilisedoverdraft facility. However, new equipment was almost exclusively acquiredthrough a finance lease. Technology was evolving rapidly at the time with theintroduction of computer-controlled weaving and cutting facilities. Thisincreased the attractiveness of renting equipment with a maintenance dealrather than purchase and ownership. The business also had a steady order bookto fund lease repayments. Also in year one greater attention was paid to theexport market with the appointment of three overseas sales executives. Thisactivity needed funding and the cost of overseas travel proved more expensivethan budgeted. The three directors met this unexpected cost by investing theproceeds of their annual performance bonus as a cash injection to purchase newequity (the equity fund managers agreed to this and a modest dilution in themajority shareholding of the fund from 88% to 80%). In years two and three,Dapper concentrated mainly on new products and developing a direct retailactivity. Orders had begun to rise based on work done in year one. The firm hadto begin using its long-standing overdraft facility for cash-flow purposes.However, overall profits increased as well. With the agreement of the equityfund, the profits were used within the business rather than paid out asdividends to fund a new in-house design team and household furnishing productsto sell alongside curtains. However, additional funding was needed during yearthree to develop a retail outlet on vacant land at the production plant and toinvest in a new website and retail order facility (the plan to develop a mailorder business was dropped). This was funded in part through a commercialmortgage on the production site (with repayments linked to the rising orderbook). However, this was not enough to fund the next expansion phase. Theequity fund agreed to a second round of funding provided all three of theoriginal directors took part as well so shareholdings were not altered. Asecond round of $100,000 equity was raised this way in year three to completethe work. The final part of the original five-year plan saw the business growand build upon the changes made in years one to three. Profits increased toclose to $700,000 by the end of year five, exceeding the plan. Total staffemployed rose to 60. The higher level of profitability came mainly from the newproducts and the direct retail sales, both of which were higher marginactivities than first planned. Export sales concentrated on more traditionalproducts. At the end of year five, the private equity fund reviewed itsinvestment. The company was valued at $3.5 million (net of debts – thecommercial mortgage of $75,000). The book value of the fund’s total investmentwas $580,000 but no dividends had been paid in the five years. The equitypartners now had a shareholding valued at $2.8 million (the three founderdirectors had shares valued at $700,000). For both the equity fund and thebuy-in team, these results represented a substantial return on the originalinvestments (in excess of 400%). In the subsequent five years, Dapper hascontinued to grow, although sales did plateau in 2010–2012 before growing againin 2013. It now has nearly 100 staff and an annual turnover of $7 million. Theoriginal equity partner did not sell on the investment in full. Rather, it wasagreed to sell half its stake (40%) to a follow-on equity fund for $1.5 millionwith one of the non-executive director roles being transferred as well. Thebusiness has continued to invest, mainly using finance leasing for itsproduction facilities, although the commercial mortgage is being paid off aswell. However, spurred on by the needs of the new equity partners, the targetis to seek to pay a dividend each year now, subject to market conditions. As aresult, Dapper has funded the most recent expansion to its retail activitiesusing debt rather than equity (assisted by a tie-in with a national retailchain and a heritage charity with over three million members). Discussion Theexample of Dapper Textiles illustrates how the correct approach to businessacquisition and planning requires both entrepreneurial people and funding. Inthis case, apart from a very small amount of personal investment by threepeople, the key to unlocking the potential for growth was achieved by linkingthese entrepreneurial people with a suitable equity investor. While the privateequity industry has at times received a degree of criticism from commentatorsabout its scale of commitment to the SME sector, in reality the example ofDapper Textiles shows how this source of funding can help three entrepreneursexecute a well thought out business plan. The scale of change in the businesshas been very significant and the number of firms that achieve the growth on ascale like Dapper is very small but they do exist. This case study alsoillustrates additional issues such as: The interaction between private equityand other forms of funding, notably the overdraft, commercial mortgage andleasing, to fund different aspects and phases and growth. The linkages betweendifferent parts of the private equity market. The initial investment wasundertaken by a specialist fund concentrating on management buy-intransactions. Half this stake was then sold after five years to a fund lookingfor more mature medium-term investments. Of course, the funding needs of DapperTextiles continue to evolve. The next phase may well have to address the futureplans of the three original investors. They have now all made a significantgain on their original investments. Also, the 40% ownership stake from thefirst equity fund is likely to come up for review and they may be looking towithdraw totally.

OUTLINE FOR A CASE ANALYSIS  

1)  EXAMINE AND DESCRIBE THEBUSINESS ENVIRONMENT

a)  Describe the nature of theorganization under consideration and its competitors.

b)  Provide general informationabout the market and customer base.

c)  Indicate any significantchanges in the business environment or any new endeavors upon which thebusiness is embarking.

2)  DESCRIBE THE STRUCTURE ANDSIZE OF THE BUSINESS

a)  Analyze its managementstructure, employee base, and financial history.

b)  Describe annual revenues andprofit.

c)  Provide figures onemployment. Include details about private ownership, public ownership, andinvestment holdings.

d)   Provide a briefoverview of the business’s leaders and command chain

3)  IDENTIFY THE KEY ISSUE ORPROBLEM IN THE CASE STUDY

a)  In all likelihood, therewill be several different factors at play.

b)  Decide which is the mainconcern of the case study by examining what most of the data talks about, themain problems facing the business,

c)  Examples might includeexpansion into a new market, response to a competitor’s marketing campaign, ora changing customer base

4)  DESCRIBE HOW THE BUSINESSRESPONDS TO THESE ISSUES OR PROBLEMS

a)  Draw on the information yougathered and trace a chronological progression of steps taken (or not taken).

b)  Cite data included in thecase study, such as increased marketing spending, purchasing of new property,changed revenue streams, etc

5)  IDENTIFY THE SUCCESSFULASPECTS OF THIS RESPONSE AS WELL AS ITS FAILURES

a)  Indicate whether or not eachaspect of the response met its goal and whether the response overall waswell-crafted.

b)  Use numerical benchmarks,like

i)  adesired customer share

ii) show whether goals were met

iii) analyze broader issues

iv) employee management policies

v) talk about the response as a whole

6)  POINT TO SUCCESSES,FAILURES, UNFORESEEN RESULTS, AND INADEQUATE MEASURES

a)  Suggest alternative orimproved measures that could have been taken by the business

b)   Using specificexamples and back up your suggestions with data and calculations

7)  WHAT WOULD YOU DO?

a)  Describe what changes youwould make in the business to arrive at the measures you proposed

b)  Include:

 Finance strategy

c)   changes toorganization

e)  management.

No matter what kind of paper writing service you need, we’ll get it written. Place Your Order Now!
× How can I help you?