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Northampton Group Inc. – Case Study Analyses: How to Increase Shareholder Value

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Northampton Group Inc. – Case Study Analyses: How to increase shareholder value
Nicole Arends, Jenny Feng, Laura Tromp & Zilha Wever
FHTMS
University of Aruba

Mr. Don Taylor
Corporate Finance
FTS 2415
March 26, 2013

Introduction
This Corporate Finance paper focuses on analyzing the challenges that Northampton Group Inc. (NGI) is facing as it tries to increase shareholder value. In the case study it is stated by the firm’s major shareholders, that they believe NGI is currently undervalued. In connection with this, the management of NGI is considering several means of increasing the shareholders value. Due to difficult economic conditions resulting from the Global Economic Crisis, there are both many opportunities as well as many risks to the alternatives that NGI’s management is considering. This paper will provide both the opportunity to use different valuation methods that will determine the value of the assets of NGI, as well as a discussion of different possible alternatives to increase shareholder value. Furthermore alternative solutions for NGI’s problem will be provided. NGI needs to elaborate by starting an active acquisition strategy or re-organizing its corporate structure with either an updated capital structure or converting to a real estate income trust. The last part of this paper will conclude with several remarks and recommendations for the Chief Financial Officer of Northampton Group Inc., Mr. Patel. These final analyses will undertake in maximizing NGI’s shareholder value.

Corporate Mission Northampton’s goal is to be recognized as the best mid-market hotel owner and operator in Canada by delivering professional and personalized service, maintain an engaged staff employing effective operating systems, build, acquire, and continually improve an exceptional portfolio of hotel assets and provide

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