Electricade Portugesa online – Term Paper – yashthakar
Search
Essays
Sign up
Sign in
Contact us
Tweet
Index
/Business
Electricade Portugesa online
Executive SummaryThe economics remain a significant risk since the business is subject to high volatility in growth plans even though the investment from Blackhole would provide them liquidity to run the business, ability to meet, match and manage growth remains the biggest riskConsidering the risks at hand, the argument for Nicolau is much easier to make a convincing sales pitch to Adriano than vice versa. Without an offer on the table, criticality of cash required and no “happy ending” for Nicolau to consider ADP, the choice is heavily skewed in favor of the owners signing a letter of intent from Blackhole.Additionally, market environment will majorly impact the eventual decision since it effects ability to meet growth plans and possibly also increase prices at which EPO can buy energy in the market.AnalysisEPO’s management team is at a crossroad where to needs to decide the future of the business, especially since it’s running out of cash. The options available on the table are to continue as present and negotiate with the banks to free deposits, sign a letter of intent with Blackhole based on current valuation, push EDP to submit a acquisition offer or finally, liquidate the firm. To assess the viability of each option, the following criteria was utilized:Economic Profitability and Cash Flow: Studied forecasted cash, time period in which firm becomes profitable and sensitivity to increase/decrease in growth.Personal and Professional Objectives: Professional aspirations of Adriano and Nicolau, personal state and mental outlook. This greatly impacts the outcome they might choose. Market Fluctuations and Competition: Examination of competitors, market price fluctuations and ability to manage growth. On examining possible options and criteria’s, two of the choices were ruled out. The firm cannot continue without a significant capital injection. The likelihood of Carla securing an agreement from the Banks to free up guarantees is extremely uncertain and the few weeks time frame in which the firm requires cash. Another option to liquidate the firm seems unlikely since there is an offer of investment almost agreed, interest from EDP and other possible parties and professional motivations of the owners. Hence, further examination of other 2 options is required to build an action plan.

EPO has forecasted extremely aggressive growth plans and according to those the company should be profitable in 2014 and a profit of 619k in 2015. The estimated profits are extremely sensitive to unpredictability in growth plans. Even a slight reduction in possible sales can lead to an unprofitable year in 2014 and marginal profit in 2015. Furthermore, to keep the company operational an approximately 200k capital injection is required immediately assuming expansions costs of 150k occur at the start of the year. The bare minimum financing should keep them operational for a few more months but the proposed investment of 500k from Blackhole will fund growth based on forecasted revenue and cash flows. Acquisition by EDP reduces a significant element of the risk since the company cant source financing capital from EDP.Understanding the intrinsic motivations of Adriano and Nicolau is critical to assessing the viability of the remaining options since each has a vested interest in success of an option. Nicolau’s professional interest in Blackhole provides him a bias for favoring an equity sale, even though the economic risks based on projections is high. For Adriano, uncertainty lies ahead, since EDP has not made a formal offer and therein lays the insecurity of a verbal offer from Bento without any support from EDP. Another factor that relates is the present personal situation and personalities since they both relate very differently. Adriano(supportive wife and lack of financial need) and Nicolau(aggressive personality and has savings to continue) seem in a situation where with an EPO funding they could continue operations. However, Nicolau appears to be the person who would be unwilling to sell since it would reduce his return and effectively imply that he discontinued with the idea.

Continue for 3 more pages »
Read full document
Download as (for upgraded members)
Citation Generator
MLA 7
CHICAGO
(2016, 10). Electricade Portugesa online. EssaysForStudent.com. Retrieved 10, 2016, from
“Electricade Portugesa online” EssaysForStudent.com. 10 2016. 2016. 10 2016 < "Electricade Portugesa online." EssaysForStudent.com. EssaysForStudent.com, 10 2016. Web. 10 2016. < "Electricade Portugesa online." EssaysForStudent.com. 10, 2016. Accessed 10, 2016. Essay Preview By: yashthakar Submitted: October 3, 2016 Essay Length: 980 Words / 4 Pages Paper type: Term Paper Views: 380 Report this essay Tweet Related Essays Building online Communities of Practice Building Online Communities of Practice Foreword Information and communication technologies are developing at a breath-taking pace. They repre-sent the foundation of the coming Information Society 8,964 Words  |  36 Pages Comparison of online and offline Retail Environment of Car Industry The offline retail environment of the automobile industry is that of manufacture to intermediary to consumer. The process from which the product (car) proceeds from 2,483 Words  |  10 Pages The Pros and Cons of Getting Your Mba online The Pros And Cons Of Getting Your MBA Online Times today, most people would like to earn more than what they’re getting. It’s only practical 725 Words  |  3 Pages Stubhub - an online Ticket Trading Website BY SUMI ABOUT STUBHUB Stubhub is an online ticket trading website which allows people to buy and sell their tickets online. The tickets range from 3,093 Words  |  13 Pages Similar Topics EBusiness Plan Online Food Impact Direct Online Selling On Get Access to 89,000+ Essays and Term Papers Join 209,000+ Other Students High Quality Essays and Documents Sign up © 2008–2020 EssaysForStudent.comFree Essays, Book Reports, Term Papers and Research Papers Essays Sign up Sign in Contact us Site Map Privacy Policy Terms of Service Facebook Twitter

Get Your Essay

Cite this page

Significant Risk And Market Environment. (July 4, 2021). Retrieved from https://www.freeessays.education/significant-risk-and-market-environment-essay/