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The Valuation And Financing Of Lady M Confections Case Solution & Answer

The Valuation And Financing Of Lady M Confections Case Study Solution

Introduction

Lady M was primarily established in 2001, to supply cakes as a wholesale business, which supplied its cakes to the New York’s luxury hotels and restaurants. The first cake boutique of Lady M confections was opened in the New York’s Upper East Side, in December 2004. In May 2006, Interior Design Magazine awarded Lady M a uniquely designed award because of its unique design and appearance. Its bakery products include a number of French crepe layers along with a layer of pastry cream, minimum 20 layers, which made its products unique and tasty as compared to the bakery products offered by its competitors. The establishment of its first boutiqueopened the doors for more expansion and growth, because its first boutique’s opening represented a huge success margin by selling its entire inventory in one day. In the subsequent years, from 2012 to 2013, Romaniszyn had opened two more boutiques, because of the successful startup of its first boutique in the New York. In addition to this, anotherboutique was opened in the same year in Los Angeles.

In 2013, Lady M successfully achieved81% sales growth along with a profit margin of 11.4%. In addition to this, Martha Stewart and Oprah, major celebrities, were its loyal customers.  Number of competitors tried to copy its taste and manufacturing style butmiserably failed to do so. Because of its high success growth, a number of investors called for business expansion in the Asian markets. One of the Chinese’s investors made a $10 million investment offer along with a credit line in order to acquire an equity stake in the company.

Problem Statement

A newly appointed CFOs of Lady M, Daisy Tom and Romaniszyn were considering  potential opportunities- the Chinese investor’s offer and opening of a new boutique (World Trade Center location). The Chinese’s investor made a $10 million investment offer along with a credit line in order to acquire an equity stake in the firm.Both options are viable and carry a potential risk. They have to decide on the attractiveness of these two options, with an inclusion of a very effective analysis of thepotential threats and risks.

Situational Analysis

In 2013, Lady M successfully achieved 81% sales growth along with a profit margin of 11.4%. One of the Chinese investorsmade a $10 million investment offer along with a credit line in order to acquire an equity stake in the company. In addition to this, Romaniszyn  decided to open a new boutique in the World Trade Center’s location, because of its main location and for attracting anumber of potential customers.(MIHIR A . DESAI and ELIZABETH A . MEYER, 2015)………………………………

 

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