Eclipse Golf Limited
(4 pages of text)
A minority shareholder in a new operation has been offered a sum of money by the majority shareholder to buy up his shares. The question is whether or not the price offered is fair, in light of the fact that the market for these new golf clubs is highly unpredictable and the production costs are not truly representative of the actual amounts that will be required.
This case addresses such issues as: valuation of shares of a small private company, minority rights and risk assessment. While there is a shortage of information, as there is in any valuation of a small private business, there is sufficient for the student to come to grips with the fundamental areas that will lead to increased insight into the problems that both Hall and Sakellis face in continuing their commitment with Eclipse. The case underlines the important relationship that finance plays in preserving and enhancing the values that are created by good marketing, production and staffing decisions. While the case covers several complex issues, it does so at a low level of difficulty. The case introduces, at a very elementary level, evaluation, negotiation and business assessment.This case can be used in an introductory Corporate Finance course and can be used as an introduction to valuation.
Canada, Small, 1984
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