Value Added Medical Products Case Solution & Answer

Value Added Medical Products Case Solution

He had established business with a potentially strong strategic position but which was simply facing short-term problems in generating cash. And he need now the strong investor who invest in his business and from this investment he wants to pay off his debt and wants to improve the company value, so he tries to approach Minbase, but Minbase refuse to invest in this company due to many issues. After pushing uphill for six years, Williams was about to lose his company and all other options.


At every stage of the business Williams wants investors who finance his company and in every stage of the business, he got his investors. Whenever he gets the amount from the investors, so he tries to engage in new business and try to increase his business further more because when he get the money from investor so he invest in his business, and he gets more and high profit from this investment so he tries to increase his investment rapidly. He was not focusing on the problems generated when he invests more in his business or increase his business portfolio he is just focusing on to spend his business in certain stages like when he wants his data base then he wants to increase his business in dental practices. Then the last he wants to increase his business worldwide, that is the worst decisions in his business.

 Due to these decisions, he decreases the sale of his company, and that decrease the value of the company. The investor is not willing to invest more in this business and his previous investor also leave this business, and his debt is increase and at one stage Williams was about to lose his company and all other options. But if he wants to stay his business, so he has to evaluate his previous investors history and he have to see the net present value and the cash book. As he got maximum profit at every stage when he got a different investors, so investing in further business or increase in business he has to focus on his present business and try to improve it. If he wants to increase his business, so he increases his debt of liabilities because he invests more than his expenses will also be incurred and at one stage if his business will be on downfall so he is unable to stay in the market because his debt will be an increase. And his business will be collapse. So he has to focus on his present business rather than focusing on increasing his business more.


investors in turn
Single period NPV method 1988 1989 1990 1991 1992
Exit Value V -£                         516,000  £               3,569,000  £ 4,591,000  £ 6,985,000  £11,049,000
Time to exit t 4 4 4.4 4 4
Discount rate r 10% 10% 10% 10% 10%
Investment Amount I $2,191,200 $2,191,200 $2,191,200 $2,191,200 $2,191,200
Number of existing shares x 57,500 57,500 57,500 57,500 57,500
Post-Money POST ($352,435) $4,444,444 $4,198,928 $3,814,697 $4,938,272
Pre-Money PRE ($2,543,635) $2,253,244 $2,007,728 $1,623,497 $2,747,072
Ownership fraction of investors F -622% 49% 52% 57% 44%
Ownership fraction of entrepreneurs 1-F 722% 51% 48% 43% 56%
Number of new shares y -49533.05125 55916.71386 62754.51655 77606.54932 45864.83354
Price per share p -44.23712944 39.18685217 34.9170087 28.23473043 47.77516522
Final wealth of investors $3,208,136 $1,759,589 $2,395,802 $4,012,254 $4,902,640
Final wealth of entrepreneurs -3724135.92 1809411.444 2195198.214 2972746.34 6146360.21
NPV of investors’ wealth $2,191,200 $2,191,200 $2,191,200 $2,191,200 $2,191,200


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