Capital Mortgage Insurance
Capital Mortgage InsuranceBen Smith
March 19, 2013
CMI Case Analysis
Frank Randall, Jim Dolan want to purchase the outstanding stock of Corporate Transfer Services(CTS). Randall and Dolan flew to Chicago to meet with the people from CTS. Randall and Dolan strategy was to pay a purchase price of $400,000 above the audited net worth of $420,000 book value of CTS's net worth. Elliot Burr was not satisfied with that price what so ever. Burr was initially expecting $5 million dollars for CTS. Burr then suggested that they skip the price issue for a bit.
Michael Kupchak was not available for the meeting. Burr stated that he had Mikes proxy and he would sell it for 3.5 million which was there reservation point. Randall was still upset at that figure. Burr, Lehman and Winder then announced they would sell it for $2 million. Burr then wanted to workout a deal where he wanted some money now and then more in the future. Dolan said that he would pay the net worth now and a fixed dollar payout in the future.
Randall and Dolan went back to there hotel to get some dinner and do some thinking. Elliot Burr started calling them but they ignored the phone calls and went to bed. Dolans phone rang in the morning and it was Burr. Burr met up with the two of them before they left. Burr replaced his $400,000 reservation point offer with a $1 million offer. Nothing was settled Randall and Dolan headed back home.
Burr tried contacting Randall several times over the next few weeks, Randall ignored most of the calls. Randall kept David Osgood of MetroNet up-to-date on the negotiations. Randall mentioned to Osgood about Burr claim that he controlled the MetroNet brokers. Osgood wrote Burr a letter regarding CTS's failure to meet commitments the company had made with MetroNet.
During this time Randall hired a consultant who had prepared the relocation industry report for MetroNet. Randall made an appointment in June to discuss the matters. Dolan in the meantime was beginning to question whether...