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As the COVID pandemic spread in early 2020, global travel ground to a halt. For Airbnb, the San Francisco-based platform for renting accommodations, the impact was both swift and severe as revenues plummeted more than 70% over the prior year. Responding to the sudden downturn was a challenge for CEO Brian Chesky and his leadership team because the firm had adopted a stakeholder model with five key constituents: guests (renters), hosts (landlords), employees, communities and shareholders. While all five groups could benefit in the long-term if the firm succeeded, it was less clear how they should balance the potentially conflicting demands in the short-term particularly given the mounting losses. For example, in the face of travel restrictions, Airbnb could support guests by requiring hosts to refund deposits or could support hosts by allowing them to keep deposits. Similarly, should Airbnb use existing cash to maintain employment levels or downsize to protect capital providers? In the highly uncertain environment that existed in April 2020, Chesky and his team had to make many critical decisions with little precedent and limited information to guide them. As one of the first Silicon Valley "unicorns" to adopt a stakeholder business model, the world would be watching to see what they did, how they did it, and why.

As the covid pandemic spread in early 2020, global travel ground to a halt. For Airbnb, the San Francisco-based platform for renting accommodations, the impact was both swift and severe as revenues plummeted more than 70% over the prior year. Responding to the sudden downturn was a challenge for CEO Brian Chesky and his leadership team because the firm had a adopted a stakeholder model with five key constituents: guests (renters), hosts (landlords), employees, communities and shareholders. While all five groups could benefit in the long-term if the firm succeeded, it was less clear how they should balance the potentially conflicting demands in the short-term particularly given the mounting losses. For example, in the face of travel restrictions, Airbnb could support guests by requiring hosts to refund deposits or could support hosts by allowing them to keep deposits. Similarly, should Airbnb use existing cash to maintain employment levels or downsize to protect capital providers? In the highly uncertain environment that existed in April 2020, Chesky and his team had to make many critical decisions with little precedent and limited information to guide them. As one of the first Silicon Valley "unicorns" to adopt a stakeholder business model, the world would be watching to see what they did, how they did it, and why.

After launching a Danish esports company in July 2019, and going public in December 2019 with multiple brands associated with different games, the Astralis leadership team was contemplating a shift to a single, corporate brand. While the original arguments for multiple, team-based brands were that esports fans differed by game and the holding company structure made it easier to acquire and divest teams, Jakob Lund Christensen, the firm's chief commercial officer (CCO), now believed that a single, corporate brand strategy made more sense as the popularity of esports continued to grow-the COVID-19 pandemic in 2020 was causing interest and participation in esports to grow rapidly. Rather than a holding company, Christensen saw the possibility of creating a leading esports company under the Astralis brand. In addition to being easier to manage corporate resources, he argued it would be easier and more lucrative to monetize a single brand. He was scheduled to meet with the firm's other leaders-CEO Anders Hørsholt and Chairman Nikolaj Nyholm, in just over a week to discuss whether they should indeed change the firm's branding strategy.

On October 7, 2020, Bespoken Spirits publicly announced it had received $2.6 million of seed funding for its "sustainable maturation process," a process that could produce award-winning whiskeys in just days rather than years using a novel technology and data science. The technology dramatically reduced the time, cost, and environmental impact (it required less energy and less wood) of making whiskey. At the same time, the technology could also be used to enhance a whiskey's taste profile which could allow producers to charge more for their products. To date, entrepreneurs Stu Aaron and Martin Janousek had proven they could produce whiskey at scale and with desired properties. Having validated the concept, they now had to decide whether to continue making whiskey themselves or use their technology to process it for others. In short, they had to decide whether to be a product-based, B2C company or a service-based, B2B company, or both? If they decided to be a service business, should they emphasis the Maturation-as-a-Service (MaaS, faster and lower cost production) or the Customization-as-a-Service (CaaS, creation of customized products with unique taste profiles) business in the short term?

Spreadsheet supplement for case 721419.

In 2000, Eaton Corporation was a broadly diversified industrial conglomerate. But its strategy was evolving and its focus was narrowing around "power management" and more recently on "intelligent power," the use of digitally enabled products and services designed to enhance efficiency and reliability. To implement this transition, Eaton had acquired more than 70 companies and divested another 50. Such active portfolio management required Eaton to regularly assess the prospects of each business unit-the profit and growth potential-and to explore opportunities to enhance its capabilities through acquisitions. In January 2020, Eaton got an offer from Danfoss, a Danish conglomerate, to buy its hydraulics business for $3.3 billion. Recently appointed CEO Craig Arnold must decide whether this deal makes sense strategically and financially. In particular, he must decide if $3.3 billion is a fair price for the firm's hydraulics business. This abridged version is shorter than the original version (HBS Case #221-006) and does not contain the appendix that explains and derives the formulas for the WACC using the capital asset pricing model (CAPM).

Spreadsheet supplement for case 221070.

When Bristol-Myers Squibb (BMS) acquired Celgene Corporation in November 2019, Celgene shareholders received cash, BMS stock, and a contingent value right (CVRs) that would pay $9 if the U.S. Food and Drug Administration (FDA) approved three of Celgene's late stage drugs by March 31, 2021. Akari Tanaka, a portfolio manager at Kendall Square Advisors, held 400,000 CVRs in her $1.2 billion Health Science Opportunities Fund, and must decide what to do with this holding given the rising concerns about the coronavirus pandemic in early 2020. The tradable CVR's peaked at $3.70 in mid-February, fell to a low of $2.15 in mid-March, and were currently trading at just under $3.00 in late March. As part of her decision, Tanaka must value the CVRs using discounted cash flow (DCF) analysis which required an estimate of the expected cash flow and a risk-adjusted discount rate. Given this analysis, she must then decide what to do with her holding-should she sell the CVRs, hold them, or buy more?

Spreadsheet supplement for case 221031.

Spreadsheet supplement for case 221006.

In 2000, Eaton Corporation was a broadly diversified industrial conglomerate. But its strategy was evolving and its focus was narrowing around "power management" and more recently on "intelligent power," the use of digitally enabled products and services designed to enhance efficiency and reliability. To implement this transition, Eaton had acquired more than 70 companies and divested another 50. Such active portfolio management required Eaton to regularly assess the prospects of each business unit-the profit and growth potential-and to explore opportunities to enhance its capabilities through acquisitions. In January 2020, Eaton got an offer from Danfoss, a Danish conglomerate, to buy its hydraulics business for $3.3 billion. Recently appointed CEO Craig Arnold must decide whether this deal makes sense strategically and financially. In particular, he must decide if $3.3 billion is a fair price for the firm's hydraulics business.

In April 2013, TransDigm, a company that manufactured a wide range of highly engineered aerospace parts for both military and commercial aircraft, announced an agreement to acquire Aerosonic Corporation for $39 million in cash (1.2 times Aerosonic's sales of $31 million). Having acquired more than 40 companies in the past 20 years, TransDigm was an experienced acquirer with a unique business model focused exclusively on value creation. This case describes TransDigm's acquisition process with a focus on the merger negotiations and the key contractual terms in the merger agreement (break-up fees, go shop period, standstill provision, top-up options, etc.). It serves as a complement to the TransDigm in 2017 case (HBS #720-422). Whereas the TransDigm case provides an overview of the company, its history, its value creation strategy, and its financial performance, the Aerosonic case provides a deep dive into a single transaction as a way to illustrate TransDigm's acquisition-driven growth strategy and to practice valuing an acquisition offer using multiple methods. Ultimately, the goal is to understand the change in value from a standalone company to a fully integrated and value-enhanced subsidiary of the TransDigm Group.

In May 2013, TransDigm, a company that manufactured a wide range of highly engineered aerospace parts for both military and civilian aircraft, announced it was buying Arkwin Industries for $286 million in cash (3 times Arkwin's sales of $91 million). Having acquired more than 40 companies in the past 20 years, TransDigm was an experienced acquirer with a unique business model focused exclusively on value creation. This case describes TransDigm's acquisition, integration, and talent development processes as well as the changes made at Arkwin over the following three years. It serves as a complement to the TransDigm in 2017 case (HBS #720-422). Whereas the TransDigm case provides an overview of the company, its history, its value creation strategy, and its financial performance, the Arkwin Industries case provides a deep dive into a single transaction as a way to illustrate TransDigm's value creation strategy in practice. That strategy consisted of three parts-value-based pricing, cost reductions, and new product development-and had the goal of doubling a target firm's operating margins and cash flows within five years.

Spreadsheet supplement for case 720467.

On April 8, 2019, Occidental's CEO Vicki Hollub made a private offer to buy Anadarko Petroleum Corporation for $72 in cash and stock. Anadarko's CEO Al Walker said he would consider the offer, yet three days later, on April 11, he signed a merger agreement with Chevron in a deal worth $65 per share in cash and stock. This agreement included a $1 billion "break-up" (termination) fee payable to Chevron if Anadarko accepted another offer. To avoid losing the deal, Hollub then made an initial public offer to buy Anadarko for $76 per share in cash and stock on April 24. When Anadarko failed to respond, Hollub, revised her offer on May 5. Although the revised offer had the same stated value of $76 per share, it included substantially more cash ($59 per share instead of the original $38 per share). With competing offers on the table, Walker now had to decide whether to accept Chevron's $65 offer or pay the break-up fee and accept Occidental's $76 offer? Of course, once he had made up his mind, he would have to convince his board that it was the right offer to accept and the right price.

TransDigm was a highly acquisitive company that manufactured a wide range of highly engineered aerospace parts for both military and commercial customers. Over the ten years ending in 2016, its stock price had increase ten times, and both EBITDA and revenues had grown at compound annual rates in excess of 20%. But in early 2017, investors, customers, and government officials began to question the implementation, sustainability, and ethics of the firm's unique value creation strategy. That strategy consisted of three parts: value-based pricing, cost reductions, and new product development. In the short term, CEO Nick Howley had to decide whether to respond to the barrage of criticism; in the longer term, he had to decide whether to change the firm's highly successful strategy.

Spreadsheet supplement for case 720422.

Spreadsheet supplement to case 719455.

Spreadsheet supplement for case 220003.