Premium Essay

Washout: the Founder’s Tale and the Investor’s Tale

In: Business and Management

Submitted By tonyqiu
Words 278
Pages 2
According to the Exhibit 1, I think the fiduciary duties of directors is that in making a business decision, the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interest of the company.

If the company is sold for a price greater than the downround valuation and the new preferred stock gets a 400 percent return plus its share of the remaining equity while the common stock gets little or nothing, the directors may be sued personally for breach of fiduciary duty.(website: http://apps.americanbar.org/buslaw/blt/2003-05-06/blomberg.html)

In this case, capitalization consist of multiple series of preferred stock while founders held the common stock, therefore it will be hard to secure financing.

At first, two engineers invest $60000 to found the Alantec Company. However, within six months, they needed capital to keep their enterprise going, so 1.5 million was invested. In 1989, the reduced revenue and cash flow have created an immediate need for cash, and TA felt it is too risky to be supported any longer by a single venture investor. But at that time, no one was interesting to put their money in Alantec at $0.88 per share, so they drop it at $0.30 per share.

This action, in my view, can be seen as the best interests of corporation. If not doing this, the company may suffer in bankruptcy. If Alantec bankrupt at that time, not only the founders, but also the VCs will suffer from it. So I believe the Board of Directors fulfills their fiduciary...

Similar Documents

Premium Essay

Finance Case

...Case 1 Warren E. Buffett, 1995 How is Berkshire Hathaway’s business composition from Exhibit 1 different or similar today? Be specific. Provide an overall statement to describe Berkshire Hathaway’s performance over time compared to the S&P 500. Can you discern a trend in the investment decisions of Mr. Buffett and are his decisions consistent with the principals learned from his mentor Dr. Graham? Based on the types of company’s that BK now owns, have the Acquisition Criteria been held to, modified, expanded upon? Is there something more to his theories? Comment on the quote “all you need to know to become a successful investor is two courses, (1) A course on how to value companies and (2) a course on human behavior”. How does Buffet’s philosophy statements on page 19 and 20 compare to what you have learned so far in your other management classes or personal experiences? What does the advice that Buffet gave the University of Florida students mean to you? Select 2 quotes on page 22 and comment on why they are meaningful to you. How has Mr. Buffet taken advantage of the recession of the past 4 years? Comment on Mr. Buffet’s quote “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful”. By use of research, how has Buffet and his company applied this statement with their current actions? Case 2 INTUIT Your textbook on page 19 makes reference to the fact that most entrepreneurs......

Words: 949 - Pages: 4

Premium Essay

Efficient Writting

...| Opportunity Identification and Analysis | | Fall Semester, 2013 Man 385 Unique #04750 | Professor John N. Doggett Class Days Monday and Wednesdays from 9:30 to 11:00 a.m. Class Room UTC 4.118 Office CBA 5.124k Office Hours Wednesdays, 5:30 to 6:30 p.m. or by appointment Phone 512-232-7671 E-Mail john.doggett@mccombs.utexas.edu Course Web Page via Canvas ------------------------------------------------- Teaching Assistants Shelby Chin (Shelby.Chin@mba14.mccombs.utexas.edu) Course Objectives I have taught this course since late in the last century. Today, as we approach a second global recession, helping people learn how to translate a “great idea” into a real business will play a role in speeding the beginning of a new recovery. For that reason, I have made several significant changes to this course. First, I have done away with the individual midterm. The “next” recovery will be a group effort. So will your midterm. Second, I have assigned you two books. These are the best books out there on how to think about innovation and then translate your thoughts into a business that can make things that people want to buy. They will become “let me read that again,” go-to books that you will use long after you graduate from UT. Third, I am going to press myself and all of you harder than I ever have. I fear that this new global recession will be deeper and more destructive than the one that......

Words: 4744 - Pages: 19