Harrington

 Harrington Article

Harrington Corporation

Teacher Kevin Ordinary

1

Qualifications

• The Harrington Organization is the leading manufacturer

of commercial office 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 organization is weighing heavily on on his well being

– " Every year another calendar: Really relentless! ”

2

History

• The outlook of Baring's retirement is known as a source of

concern to the CFO, Paul Creeks

– Baring intends to divest the company and relinquish control – Baring is soliciting provides in the $10M range and finding a lot of interest amongst corporate purchasers

• In spite of Baring's guarantees that the current

management group would be protected in the event of

an alteration of control, Brooks is skeptical the modern

owner could leave anything as is

– Two CFO's?

• Two times the trouble and half the potency of one CFO

3

History

• Creeks is not really optimistic of duplicating his current

condition at one other employer

– Current responsibilities include

• Shareholder reporting: one individual

• Capital cash strategy: major capital expenditure system just finished

– Harrington facilities one of the most modern in the marketplace, excellently managed

• Monetary forecasting and planning: level production; 98% re-order level for merchandise

• Seed money management: pay out cash for a lot of orders the moment due • Debt issuance: two unutilized $1M lines of credit

• Collateral issuance and dividend plan: as Owner decides

some

Background

• Brooks can be not optimistic …continued

– Brooks at the moment enjoys a compensation bundle of $45, 000 per year plus 2 . 5% of pre-tax profits

• For any total of $80, 000 in the newest year, 70

• Corresponding to $463, 724 in 2011 dollars

– The outlook of an expanded search and possible moving does not charm, particularly given Brooks' career

history

• Graduated by a leading university of business administration • Worked five years in the venture capital area of a large Boston bank • Started individual management asking firm just before joining Harrington – Meaning out of work for 2 years

– Had to stage over the laundry basket every day on method to the " office” five

Background

• Having selected his possibilities, Brooks gathers the

administration team collectively and suggests making a bid

– Affiliates include Kim Darby (marketing), Keith

Jackson (manufacturing), and Waldo Sloane (controller)

• Have a combined 90 years experience available

• Baring is amenable to a bet from administration and

happy to delay further more solicitations of interest

provided that

– Proposal received in six weeks

– Meets Baring's cost of $10M, $8M of which is in money

• No more than $2M of seller funding

6

Economics of the Transaction

• The managers will be unanimous that Baring's retirement

presents an exceptional buying option

• Among Harrington Corporation's favorable qualities:

– Large barriers to entry, because of economies of scale in production • To match Harrington's costs, an entrant would have to match their investment in high speed printing presses, leading to overcapacity and a incapacitating price warfare

– Almost recession-proof item

• Desk calendars disproportionately favored by people who work at tables; i. electronic., in the assistance rather than making sector

– The services sector is usually historically much less susceptible to financial downturns

• A workplace calendar can be an inexpensive but essential part of office program, virtually immune from finances cutting

six

Economics of the Transaction

• Favorable qualities …continued

– High client re-order rate (98%)

• Harrington workplace calendars will be competitively costed; company products its own stands

• Need to purchase another appointments? Better shop around hard and purchase a stand yourself

– Plus, better do it that kicks off in august when your Getting Department is...