You are on page 1of 8

Professor Kevin Rock

1
Background
• The Harrington Corporation is the leading producer of commercial desk calendars in
the US at the time of the case
– Founded by Joshua Harrington in 1920 – Headquartered in Boston – Currently owned
by Thaddeus Baring, a descendant of the founder
• Thaddeus Baring is contemplating retirement
– The stress and strain of the calendar business is taking a toll on his health – “Every
year another calendar: It’s relentless!”
2
Background
• The prospect of Baring’s retirement is a source of concern to the CFO, Paul Brooks
– Baring intends to divest the business and relinquish control
– Baring is already soliciting offers in the $10M range and finding some interest among
corporate buyers
• Notwithstanding Baring’s assurances that the current management team would be
protected in the event of a change of control, Brooks is skeptical the new owner would
leave everything as is
– Two CFO’s?
• Twice the trouble and half the effectiveness of one CFO
3
excellently maintained • Financial forecasting and planning: level production. 98% re-
order rate for product • Working capital management: pay cash for all orders when due •
Debt issuance: two unutilized $1M lines of credit • Equity issuance and dividend policy:
as Owner decides

4 .Background
• Brooks is not optimistic of duplicating his current situation at another employer
– Current responsibilities include
• Shareholder reporting: one individual
• Capital budgeting: major capital expenditure program just completed
– Harrington facilities the most modern in the industry.
000 in the most recent year.
Background • Brooks is not optimistic …continued – Brooks currently enjoys a
compensation package of $45. particularly given Brooks’ employment history •
Graduated from a leading school of business administration • Worked five years in the
venture capital area of a large Boston bank • Started own management consulting firm
before joining Harrington – Which means out of work for two years – Had to step over
the laundry basket every day on way to the “office”
5 .724 in 2011 dollars – The prospect of an extended search and possible relocation
does not appeal. 1970 • Equivalent to $463.5% of pre-tax profits • For a total of $80.000
per year plus 2.
Keith Jackson (manufacturing).Background • Having surveyed his opportunities. and
Waldo Sloane (controller) • Have a combined 90 years experience in the business •
Baring is amenable to a bid from management and willing to delay further solicitations of
interest provided that – Proposal received in six weeks – Meets Baring’s price of $10M.
$8M of which is in cash • No more than $2M of seller financing

6 . Brooks gathers the management team together and proposes making a bid – Team
members include Kim Darby (marketing).
an entrant would have to match its investment in high speed printing presses. i. virtually
immune from budget cutting

7 .Economics of the Transaction • The managers are unanimous that Baring’s


retirement presents a unique buying opportunity • Among Harrington Corporation’s
favorable attributes: – High barriers to entry.e.. due to economies of scale in production
• To match Harrington’s costs. in the service rather than manufacturing sector – The
service sector is historically less susceptible to economic downturns • A desk calendar
is an inexpensive but essential part of office routine. leading to overcapacity and a
debilitating price war – Virtually recession-proof product • Desk calendars
disproportionately favored by those who work at desks.
because dilute profitability and returns – Though returns still higher than cost of capital

8 . Purchasing wants it done early to take advantage of Harrington’s discount – Multiple


expansion opportunities • Personalized appointment books. company supplies its own
stands • Want to order another calendar? Better shop around hard and buy a stand
yourself – Plus.Economics of the Transaction • Favorable attributes …continued – High
customer re-order rate (98%) • Harrington desk calendars are competitively priced. day
planners. better do it in August when your Purchasing Department is sending out the
requisition forms . desktop accessories • All vetoed by Baring.
taxation and from Puerto Rican taxation until 1982 – Unutilized debt capacity • • • •
$2.88M cash as of December 31. if need be – Combined savings of $272K after tax
(20%). 1970 $2M undrawn working capital lines $0M long term debt and trade financing
Excellent receivables collection experience – Eminently realizable cost savings •
Baring’s salary of $200K per year • Management bonuses of $140K per year. At a 10×
multiple. worth $2.Economics of the Transaction • Favorable attributes …continued –
Minimal capital expenditures on core business until 1975 • Recently renovated plant in
Puerto Rico.S. permanently exempt from U.7M

9.
Brooks enjoys favor of Owner • Brooks increasingly responsible for general
management of business as Baring disengages – Insider price • Granted right of first
offer – exclusive right to enter into good faith negotiation with seller before seller
entertains other bids • And nearly granted right of first refusal – Baring seems to be
suggesting the company is theirs if only the management team can meet the $10M
price

10 .Economics of the Transaction • Favorable attributes …continued – Insider deal.


Baring insists the management team personally endorse the note.Financing • Although
the economics look good. in the amount of $3M • The loan would be provided by a New
York City bank. the financing does not – Brooks and fellow team members only have
$250K of capital • Brooks is tasked with raising more money – Over next three weeks. in
order to minimize strain on the company’s cash flow. as a result. Brooks obtains a
tentative commitment for an unsecured loan. the principal amount of the note would
exceed $2M ($3M to be precise) • In return for these concessions. rather than Brooks’
former employer in Boston – Brooks also reaches an understanding with Baring to
accept a five year subordinate note in lieu of $2M in cash • The note would carry a
below market rate of 4%. making them and their families potentially liable for the entire
amount

11 .
Brooks is still short $4. to be exact – exercisable into common stock at $1 per share –
The same price paid by Brooks and the other members of the management team in
acquiring their own stock • Also want an 8% – 9% coupon plus the ability to exercise the
warrants in kind (by surrender of equivalent principal amount) rather than in cash – All-
in-all.Financing • With three weeks to go.75M – Turns to his old venture capital contacts
– His venture sources are willing to fund the remaining $4. the venture investors are
looking for a return of 20% .75M in the form of a 20 year debenture but at a steep price •
Want the debt to include an equity kicker – stock warrants.25% over their estimated
holding period of six years (to 1976) • With considerably more downside protection than
the management team

12 .
Financing • Brooks finds an alternative funding source for part of the shortfall in
Harrington’s two.881M can be remitted to Baring just before closing – Reducing the
purchase price to the management group on a dollar for dollar basis • The size of the
remittance depends critically on the timing of – The compensating balance requirements
– The net working capital positions

13 . unutilized working capital lines – Rate of 6.25% instead of 20% .25% – Availability
up to $2M • By drawing on the lines for seasonal working capital needs. some of
December’s estimated cash balance of $2.
817 9/30/1971 12/31/1971 3.626 733 8/31/1971 3. the non-financial working capital
accounts are expected to be 5% higher than 1970 (Ex.334 276 309 (616) (665) 2.160
(652) 894 (37) 6/30/1971 317 2. 1971. round $3M

14 .131 3/31/1971 385 1.918) • Preliminarily. Brooks assumes a $1.270 inventories 294
current liabilities (633) non financial net working capital 931 change in non-financial
WCAP Initial Cash Position begin cash 2.443 1.236 1.205 877 (638) 3.896 978 (547)
(1.015 (706) 1. the forecast quarterly and peak net working capital positions are Non
Financial WCAP (Quarterly + Peak) 12/31/1970 accounts receivable 1.750) remaining
cash 1.881 cash left behind (Baring) (1.Financing • For the forthcoming year.75M
disbursement at close – Reducing the venture funding requirement to a nice. 4) • Thus.
750) (1.517 $ 2.165) 820 15 .131 1.881 2. Brooks arrives at a preliminary estimate of a
$1.896 978 change in non-financial WCAP (37) 733 1.083 401 (1.275 Bank Term Loan
Loan outstanding (monthly payments) $ 3.276 compensating balance (20% term loan)
600 564 528 503 491 455 Balance surplus (deficiency) 531 519 (126) (1.750) (1.819 $
2. the peak borrowing month – The shortfall can easily be covered by drawing on the
$2M working capital line Non Financial WCAP (Quarterly + Peak) 12/31/1970 3/31/1971
6/30/1971 8/31/1971 9/30/1971 12/31/1971 accounts receivable (Exhibit 4.638 $ 2.750)
(1.205 3.076 3.817 (547) (1.015 877 276 309 current liabilities (633) (652) (706) (638)
(616) (665) non financial net working capital 931 894 1.236 1.626 3.457 $ 2.270 385
317 3.833 2. 5% growth) 1.443 2.Financing • Assuming the term loan is paid monthly
and the compensating balance requirements apply monthly as well.750) (1.000 $ 2.851)
(1.918) Cash Position forecast cash (Exhibit 4.025 cash left behind (Baring) (1. 5%
growth) 2.750) remaining cash 1.851M shortfall in August.151 402 1.160 2.750) (1.348)
(674) 1.334 inventories 294 1.
832M Cash Flow (Quarterly and August Peak) 12/31/70 3/31/71 Cash flow from
operations (post interest) 216 less investment in non-financial WCAP (37) assumes Jan
1 close. less capx 15 operating flows not less repayment of bank loan 181 seasonalized
cash flow.517 $ 503 1832 1267 2.8/31 8/31 .819 $ 564 0 53 2.Financing • A more
refined estimate. shows a slightly smaller August draw of $1.9/30 12/31/71 216 144 72
216 733 1817 (547) (1.457 $ 491 1267 0 2. after invest and debt service 57 plus begin
cash 1.188 528 503 491 (528) (503) (491) (455) (53) (1779) 566 1.974 53 1779 (566)
(1267) 528 503 491 1.276 455 6/30/71 6/30 .000 $ 16 . based on a forecast of all the
monthly inflows and outflows.162 (660) (24) (12) 671 Total 47 31 78 $ 3.131 less comp
balance req't (20% loan) (564) equals excess (deficiency) 624 plus seasonal draw (max
highlighted) 0 equals end cash (begin + cflow +draw) 1.638 $ 528 53 1832 2.188
change in cash 57 change in WCAP begin seasonal loan end seasonal loan Bank term
loan (monthly payments) minimum balance (20% term loan) 0 0 2.918) 15 10 5 15 181
121 60 181 (713) (1804) 554 1938 1.
75 to $1. the net working capital is $894K. however.5M. to permit any change • Brooks
has squeezed all the cash out of the firm he prudently can 17 . $1. so are the balances
– In the March quarter.Financing • Since the anticipated August draw is still $168K
under the borrowing limit. adding the $624K of cash not held as compensating balances
(the “excess” in the preceding slide) gives working capital of $1. Brooks is tempted to
increase the upfront payment to Baring a comparable amount.518M. from $1.918M •
Brooks soon realizes . which is too close to the covenant. even a small increase could
cause trouble with the working capital covenant on the term loan • Compensating
balances are classified as current or non-current according to the loan itself – Since the
term loan is non-current. exclusive of cash – Therefore.
750 3. in the event the warrants are exercised 18 .000 3.000 250 10.000 $ • The main
question is whether it satisfies the management’s and V.Financing • The proposed
financing package is. Financing for Harrington Buyout Cash left in company Term loan
Venture capital debenture plus warrants Baring subordinated note Management equity
Total $ $000's 1. therefore.000 2.C.C.’s need a 20% .25% return to 1976 (exit) –
Management needs to retain control (>50%).’s objectives – V.
804 $ 1.334 $ 1.262 $ 1972 1973 1.988 22.717 $ 17.Valuation • Seek to value the
management equity using the APV method to value the firm • APV seems a sensible
approach because the debt schedule is fixed in dollar terms until the anticipated exit
date.280 120 78 60 1. not true of Harrington until after 1976 Unlevered equity flows
EBIT tax rate EBIAT plus non cash charges less increase in working capital less capital
expenditures equals unlevered equity flows $ 1971 1.541 170 100 300 1.894 $ 20.4%
1.386 $ 1974 1975 1.311 $ 19 .1% 1.6% 1.401 130 142 82 86 67 71 1.353 1.419 $
1.475 150 155 90 95 75 233 1.5% 1. 12/31/1976 – Flows to capital is a less preferred
alternative because the methodology assumes a constant proportional capital structure
• Meaning the debt is fixed as a constant percentage of firm value.303 $ 1976 1.5%
22.3% 18.516 $ 15.434 1.636 $ 1.
7% 5.9% 13.7% 12.80% 8.5% 9.2% 5.73 Est'd unlev'd ke 11.25% 5.9% 10.e=11.5%
16.p. the term in the parentheses is known as the “dividend yield” – Applying the model
to the comparables in Exhibit 5 gives an unlevered cost of equity of ku.8% 0.s.25% 6.
such as China Comparables Kane Granger Linden-Johns Average Gordon Growth
Model dividend yield + rev growth '66-'70 = cost of equity -riskless rate 8.5% 0.5%) •
good method of estimating equity costs in developing economies.3% 0.2% 14.99 70.6%
0.s.07 × % equity = β unlev'd 71.6% 20 .25% 3.8% ÷ MRP 8./(ke−g) • Where d.61 1.
ke=g+(d.0% 7.80% =beta 0.6% 5. is dividend per share and g is the growth rate (in
dividends or sales) – Flipping the Gordon model around.80% 8.24 1.44 79.75 73.7%
1.Valuation • Need an unlevered cost of equity to discount the unlevered cash flows –
But case written before CAPM – no beta! .p.6% (rounded to 11./ Pstock ).s.p.what to
do? – Use Gordon growth model: Pstock = d.
5% 6% 11. namely 75% equity and 25% debt (see preceding slide) • Harrington is
expected to be a typical firm at that time.’s expected to cash out – At a 7. the WACC is
about the same as the unlevered ke WACC calculation target equity unlevered beta ke
pre tax cost of debt tax rate (1976) kd WACC 75% 0. management and V.C.5% – The
result is not too surprising. as the tax shields are small and the bank rate is high • P +
2% is no bargain for the most senior debt in a relatively stable company 21 .70 13%
7.Valuation • For the terminal value. equivalent to the current bank term loan.25% rate.
want to estimate WACC in 1976 – Using a capital structure typical of firms in the
industry.25% 22.
Valuation • Estimating a growth rate for the post 1976 cash flows is challenging – Surge
in capital expenditures in 1975 and 1976 – Incremental increases in tax rate every year.
even though sales increasing at 5%/yr – 1%? 2%? Split the difference and say g=1.5%
per year – Therefore.311   $13. growth in cash flow should be restrained. a rough
terminal value estimate is Same as FCFcap of course $1.1976 • Note the terminal value
includes the PVITS from 1977 onward . notwithstanding Puerto Rican operations totally
tax exempt until 1982 (shifting production to US?) • Assuming the trends in capex and
tax continue.111 WACC  g 10% 22 FCFeu .
its estimated value at that time is $12.111M from the perpetuity method.Valuation • One
way to check the terminal value is to compare it to the initial value • It better be the case
that Harrington can be sold at the same multiple of EBIAT in 1976 that management
paid in 1970 – Management is supposed to be getting a good price from the Owner •
After deducting the excess cash of $1.993M – Virtually identical to the $13.25M for the
company – Or a multiple of 8.75M which is not part of the deal. the investors are paying
$8. Harrington’s EBIAT forecast is $1.39 times 1970’s EBIAT of $983K • In 1976.541M
(slide 19) • Thus. the number used henceforth below 23 .
804 $ 1.434 1.303 $ 14. for the moment.894 $ 1.717 $ 1.1% 22.5% 1.401 1.5% 12.
excluding PVITS ('71-'76) EBIT tax rate EBIAT plus non cash charges less increase in
working capital less capital expenditures plus terminal value equals unlevered equity
flows + TV unlevered cost of equity firm value & enterprise value $ 1971 1.353 1.636 $
1.5% 22.386 $ 1.516 $ 15. the interest tax shields to 1976. the firm/enterprise value of
Harrington is Valuation.419 $ 1.111 1.Valuation • Ignoring.475 1.6% 1.3% 18.334 $
1.384 1972 1973 1974 1975 1976 1. the equity investors are getting a very good deal –
an NPV of over $4M – But who exactly are the equity investors? Management? VC’s?
Both? • Need to come back to this question 24 .25M net.4% 20.541 130 142 150 155
170 82 86 90 95 100 67 71 75 233 300 13.422 $ $ • Based on an acquisition price of
$8.988 17.280 120 78 60 1.262 $ 11.
30 1971 1972 1973 1974 1975 1976 637 $ 585 $ 523 $ 454 $ 400 $ 400 15. it is
necessary to discount the shields separately for each layer of debt – At each debt
layer’s yield to maturity 25 .6% 17.3% 18.PVITS • The missing interest tax shields are
unlikely to add significant value because of the low tax rate in the 1971-76 period • An
approximation to their present value can be obtained by discounting the shields by the
unlevered cost of equity PVITS 1971-76.5%) $ $ $398. simple method interest expense
times tax rate equals interest tax shield PV at unlevered cost of equity (=11.1% 22.4%
20.5% 22. however.5% 99 $ 101 $ 96 $ 93 $ 88 $ 90 • To do the PVITS calculation the
right way.
25% $ Seasonal loan: interest (plug) $ tax shield Present value at 6.25% $ VC debt
average balance $ interest at 9.00% tax shield Present value at 11% (est'd stripped
yield) $ Baring note average balance interest at 4.000 $ 270 47 3.000 120 21 $3.000 $
270 55 3.000 $ 270 50 3.25% tax shield Present value at 7. but the difference is small
≈4% 26 .851 $ 134 23 1973 945 $ 69 13 1974 233 $ 17 3 1975 700 $ 51 11 1976 900
65 15 $3.704 108 22 $1.000 $ 270 42 217 $3.638 $ 191 30 78 1972 1.000 $ 270 60
3.4% (IRR) $ Total PVITS $ 3.9 3.PVITS • Here are the results of the so-called
“accurate method” PVITS 1971 to 1976 ($ 000's) Bank loan: average balance $ interest
at 7.000 120 22 $2.192 48 11 $0 0 0 • Theory says the accurate method results in a
higher PVITS – And so it does here.00% tax shield Present value at 13.000 270 61 56 $
9 52 61 $ 11 64 $ 12 59 $ 12 32 $ 7 65 15 1971 2.000 120 19 67 413.
75% • As a straight debt security.746M.PVITS • Note the assumed yield to maturity on
the VC debt is 11% – Lower than the 13. why would the VC’s pay $3M? • The difference
of $254K is the price of the “equity kicker” (warrant) 27 . price to call (12/31/1976)
interest & principal repayment assumed yield present value (price) 12/31/71 270 11%
$2. assuming an annual coupon of 9% and callable at par on 12/31/76 VC debt.5%.
here 4.746 12/31/72 270 12/31/73 270 12/31/74 270 12/31/75 270 12/31/76 3270 •
So.25% yield on the 10 year Treasury bond (not in case) because the VC debt is illiquid
and non-investment grade (“junk”) • B-rated spreads to long Treasuries are normally 4%
. the VC bond is only worth $2.4% yield on the Baring note because Baring has the
more subordinated claim – Higher than the 6.
$42K on a PV basis (20% rate) – Even less if take into account VC’s can “put” the debt
back at par as exercise consideration – Bottom line: The VC’s pay less than a $42K
premium relative to management for an approximately equal stake in the company 28 .
have an additional $250K outlay upon exercise • But that’s not for six years. the VC’s
compare their deal to management’s – Upfront cost of the warrant is the essentially the
same as management’s stock: $254K versus $250K. same number of shares – VC’s.
except the exercise price is paid to the company. can earn VC-like returns in the interim
≈ 20% • And don’t forget: half of that outlay goes back to VC’s as 50% owners • Thus.
net cost of exercise only $125K.The VC Debt plus Warrants • How do the VC’s know
what the warrant is worth? – An equity warrant is the same as a stock option. however.
not a third party – Formula for valuing options (Black Scholes) not published until 1973!
• First.
961 4. it would be better for the VC’s to use $250K of bonds at face value in lieu of
money 29 . when the VC’s expect to exit Terminal value of equity (12/31/1976) Terminal
value of firm less bank term loan less seasonal less sub debt less Baring plus proceeds
upon exercise of warrants equals equity value VC stake (50%) management stake
(50%) $ 13.981 4.981 $ $ $ • The estimate assumes the VC’s exercise the warrants in
cash – Again. if the debt is trading below par at that point. the VC’s compare their deal
to previous deals – See if they earn a 20% .110 (399) 0 (3.000) 0 250 9.25% holding
period return.The VC Debt plus Warrants • Second. using the base case forecast and a
50% equity position • Here is the equity value in 1976.
001 • Note the VC’s meet their hurdle rate of 20% – The calculated return of 23. have a
workable deal – management has a positive NPV opportunity and the VC’s meet their
return objective without exceeding 50% ownership – But can management do better?
30 .750 4.981 (3.000) $ 23.The VC Debt plus Warrants • Based on the terminal equity
estimate. the VC’s returns are VC cash and percentage returns interest principal less
exercise cost ($250K) terminal equity stake initial investment Total $ IRR: 1970 $ 1971
270 $ 1972 270 $ 1973 270 $ 1974 270 $ 1975 270 $ 1976 270 2.5% 270 $ 270 $ 270 $
270 $ 270 $ 8.25% • Therefore.000) (3.5% is in the approximate middle of the required
range of 20% .
and even little Thaddeus the cat 31 . management is looking at an expected return of
64.Management • How well is management doing in the transaction as currently
structured? – Put in $250K – Equity worth $4. highly risky position – Last to get out –
Restricted compensation – Unlimited downside • have pledged house. car.981M in 1976
– Receive no dividends in the meantime • Therefore.6% annual return enough? Hard to
say.6% per year • Is a 64.
Management • Perhaps a different perspective might help.532 $ 12.548 • There is $4.
the warrant holders are entitled to a half share in the upside (≈$2. clearly – That’s
management … – Plus the warrant holders • As the transaction is currently
structured.384 interest tax shields 398 414 Total value.250) 4.250) 4. here is the NPV of
the entire transaction Harrington Enterprise Value and NPV simple APV accurate APV
Present value. levered firm and enterprise $ less purchase price NPV $ 12.782 $ (8.798
(8.27M). once they have paid the exercise price 32 . unlevered equity flows $ 12.384 $
12. who are the rightful owners of this NPV? – The equity investors.548M of value in
Harrington over and above the company’s price.
566 5. assume the warrants expire at 12/31/76 and have a zero exercise price 33 .000
yield 7.000 2.40% 1976 acc'd princ'l & int $ 4.25% 9.Management • Want to have one
more look at the valuation – Check the pricing of the debt as well as the equity •
Suppose all the principal payments scheduled up to 12/31/76 are rolled over with
interest until the exit date – Like carrying a balance on a credit card until you get paid •
The accumulated principal and interest is $13. VF • For simplicity.00% 13.000 8.85M
Harrington buyout debt Term loan Venture capital debt Baring subordinated note Total
estimated value at 12/31/70 $ $000's 3.253 $ 13.000 3.031 4. as a function of the firm
value.850 $ • Consider what the equity is worth at that time.
zero • The equity value at exit is the same as the payoff of a call option – the underlying
asset is the firm.85M . 0] – The equity equals the value of the firm less the debt • As
long as that difference is positive. whose initial value is $12. else.08M – Go to
http://www.Management • The value of the equity on that date is max[VF−$13.25%
(equal to the 10 year Treasury note. the equity plus warrants at $5.xleverywhere. 32) –
the exercise price is $13.85M.htm and try it! 34 .798M (pg. the 6 year riskless rate is 6.
pg.com/samples/bs/bs. indicative of a safe business – the equity value includes the
warrants. 27) – the volatility of the firm is assumed to be 30%. which are either
converted to stock on that date or thrown away • Putting these parameters into the
Black-Scholes model values the option and therefore. the exercise date is 6 years.
08M is virtually identical to the original estimate – The difference of $44K looks a lot like
the exercise cost of the warrants.052 • Therefore.Management • The implied equity &
warrant value of $5. and wt. debt refers to the aggregate debt. holders (pg. on the
accuracy of the pricing of any particular debt instrument. which was ignored for
simplicity in the option analysis – The cost adds to value because it is a deferred
payment for equity Value of equity plus warrants at 12/31/1970 Price paid for
management equity $ Price paid for warrants NPV shared by mgnt. however. stripped of
the warrants • Cannot really comment. 32) Total $ $000's 250 254 4. then the debt is
properly priced – Here. just the totality 35 .548 5. if the firm is properly priced and the
equity & warrants are properly priced.
000) (3.2%) initial investment Total $ IRR: 1970 $ 1971 270 $ 1972 270 $ 1973 270 $
1974 270 $ 1975 270 $ 1976 270 2.000) $ 20.2% – in which case.750 3.516
(3.Management • This analysis confirms management and the VC’s get basically the
same deal as far as their equity interests are concerned – Both pay about $250K for a
50% interest • That doesn’t sound fair – Management doing all the work.536 36 . even
betting the cat – VC’s need to give up some of their equity percentage • How far down
can VC’s go and still clear their hurdle? 35.0% 270 $ 270 $ 270 $ 270 $ 270 $ 6.
management’s return increases to 72% and justice is done VC cash and percentage
returns interest principal less exercise cost ($250K) terminal equity stake (35.
and Samuel Negin • O’Neill became President.6% is not known • But that’s not the end
of the story – it’s more like the beginning 37 .6% annual return • No information on the
VC share. Robert Nevin. Jay Negin CFO.11M used above – Thus. the management
team realized a better than 64.What happened • Harrington Corporation is actually Keith
Clark Calendar • In 1967. so how much better than 64. John Keith “Pete” Clark decided
to retire after 28 years and sold his company to four men – James O’Neill. and Samuel
Negin Treasurer • In the mid 1970’s. these individuals sold the company to Lewis
Cullman for $13M cash – Very close to the assumed terminal value of $13. Robert
Nevin Vice President. Jay Negin.
then embarked on a career of philanthropy. while remaining sole owner • In 1999.
Cullman expanded the company until it had a 90% market share.html 38 .
Dorothy.com/pages/cullman_bio.lewiscullman. he sold the company to Mead Paper for
$550M • He and his wife. he described the Keith Clark Calendar business “as about as
good as it gets” – Agrees with our assessment! • Over the next 22 years.What
happened • In Lewis Cullman’s autobiography. giving away $233M to a variety of
educational institutions and medical centers • You can read about it in his book
http://www

You might also like