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QI Tech A Chinese Technology Company For Sale Case Solution

Solution Id Length Case Author Case Publisher
2245 369 Words (2 Pages) Walter Kuemmerle, Chad Ellis Harvard Business School : 899079
This solution includes: A Word File A Word File and An Excel File An Excel File

Since the growth prospects of the company are brighter given the market conditions and its own competencies and they have many opportunities from strategic buyers and investors Kollbrunner and Li can opt for an aggressive target premium which can be up to 80% since the company has shown tremendous growth potential of around 200% in net income growth in last 36 months (Exhibit 11) which is significantly higher as compared to peers.

Following questions are answered in this case study solution

  1. What price and terms should Kollbrunner and Li pursue in a deal with Brown and Sharpe? What should be their starting price in the negotiations? What should be their walk-away price? 

  2. What concerns might Brown and Sharpe have regarding a deal? How could the seller mitigate these concerns? What should be their starting price? What should be their walk-away price?


Case Analysis for QI Tech A Chinese Technology Company For Sale

Qi Tech also has a high P/B ratio as compare to the low P/S ratio which represents that company is currently undervalued and its intrinsic worth is more than its market price. The enterprise value at the acquisition premium of 80% would be 87,161 USD. The walkaway price should not be a minimum to 60% as they can negotiate on a higher price range. At the premium of 60%, the target price of the company would be 77,511 so that should be the range for negotiation and any offer below that should not be accepted. The Kollbrunner can also negotiate on terms of control and management and ownership structure keeping it on their favour.

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