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Sky Air Case

In: Business and Management

Submitted By MiamiHeat
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Sky Air Advance Assignment
1. Samuel Kaplan is currently a principal and an agent at Sky Air because he is the only person running the company. If Sky Air is sold, at least in part, to Thyestean, he will become a principle. However, Thyestean will have no members on the board so they will have no say in how the company should be run, so even though Kaplan is giving up 30% of his business, he still makes all the decisions.
2. Kaplan and Sky Air are facing some near-term decisions, which include whether or not to accept the offer, whether or not they should counter-offer, and if they do counter-offer, what would he decide to make the new terms.
3. I believe that Thyestean’s offer is the more reasonable of the evaluations of Sky Air. Kaplan believes that his company is worth at least $66.6 million based off his estimate of 30% for $20 million. However, Thyestean believes that the company is only worth $20 million (30% stake at $6 million). Due to the fact that there are major airlines already established, Sky Air will most likely remain a smaller airline company. So, their ceiling for growth is limited, which means there profitability growth rate will eventually even out, probably somewhere around where it is now because the company has been in business for 10 years.
4. Sky Air appears to be worth less to Thyestean than to Kaplan because profitability growth has slowed, and even declined slightly in the last year. Also, Kaplan founded this company, so there is also a little bit of bias from Kaplan as well. Also, Thyestean has managed over $500 million in assets, so Sky Air is just another small investment to them.
5. By selling Sky Air, Kaplan hopes to be able diversify his wealth at a time when his family was beginning to grow (his wife was pregnant with triplets). Also, Kaplan did not want to be fully invested in Sky Air anymore because he wanted some more...

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