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The case examines the aftermath of the March 2015 Centerbridge Partners acquisition of Great Wolf Resorts, a North American family-oriented indoor water parks and hotel operator, from a private equity (PE) competitor, Apollo Global Management.

The case examines the March 2015 Centerbridge Partners investment decision regarding whether to acquire Great Wolf Resorts, a North American family-oriented indoor water parks and hotel operator, from a private equity (PE) competitor, Apollo Global Management. The case allows for discussion of strategic and financing considerations by Centerbridge, a New York-based investment firm employing a flexible approach across investment disciplines: private equity (PE); credit, distressed strategies, and special situations; and real estate. Students are presented the opportunity to perform valuation analysis and compare two possible forms of financing for the potential acquisition: 1) traditional corporate debt and bond financing and 2) commercial mortgage-backed security (CMBS) financing. Strategically, the case poses the questions: Was Centerbridge valuing Great Wolf correctly? Would CMBS be the optimal financing structure, and why had no other firm contemplated this type of financing? Would the company, in partnership with Centerbridge, be able to execute on operational improvements and growth strategy? Was the purchase price multiple of 9.4x warranted in light of the opportunity set? Would an established PE firm like Apollo ever leave enough on the table for a successor private-equity owner to generate gains without necessary multiple expansion?

MaryAnne Gilmartin, President and CEO of Forest City Ratner ("Forest City") was planning for yet another protracted discussion over the merits of a green roof for part of her $5 billion dollar new development in Brooklyn. While the low seven-figure cost overrun was to be "value-engineered" and in the scheme of things, this budgeted item was not going to impact the financial success of the project, it had become a heated source of contention. Was the debate symptomatic of something deeper that was amiss in the relationship?

Budgets are considered by many to be a necessary evil. Within organizations, budgets are used to allocate financial resources to individuals who are charged with managing funds. This allows them to accomplish corporate goals and objectives. When reviewing the differences between actual and planned spending for a number of cost centers evidenced in data covering a 4-year period, it was noted that favorable variances exceeded unfavorable ones more than 50% of the time, although probability suggests that favorable and unfavorable results are equally likely to occur. As budgets are only best guesses about the future, these results indicate that planned spending was intended to manage uncertainty. In other words, the budgets were intentionally misstated-that is, they were lies. This Executive Digest explores ways of uncovering these lies. The consequences of intentional misstatement of planned spending are serious. In such cases, financial resources are not only misallocated, but also allocated in a suboptimal way. This means that future borrowing costs may increase, important projects could be delayed, and necessary operating expenditures are not made.

This case requires students to evaluate alternative dual-share-class corporate structures that allow companies and entrepreneurs to pursue profit with purpose. The case explores Impact Makers, an IT consulting company based in Richmond, Virginia. While original founders of the firm hold all voting rights, the cash flow rights belong to two nonprofits setting the stage for a Newman's Own model of management consulting. The case discusses whether and how the alternative corporate structure aids the firm's overall strategy to attract top-quality employees, pay them competitive salaries, and provide superior service to its clients while donating 100% of its lifetime value to charitable causes, largely through partnerships with various nonprofit organizations. More importantly, the case asks students to evaluate how such a dual-share-class and dual-purpose company can raise capital to fund continued growth. The case opens with CEO Michael Pirron reminding himself of all the questions he had run through to execute a strategy to further grow Impact Makers' consulting business both through expanding a menu of services and through conquering new geographical markets. To do either, or both, the company needed a cash infusion. Internal cash was limited, as up to 40% of it flowed to charitable partners, demonstrating Impact Makers' commitment to its mission. Raising debt for a company without fixed assets was challenging and time consuming. Complicating it all was that being structured as a nonstock corporation rendered equity raising difficult. Could Impact Makers raise money to grow and stay true to community values at the same time?

This case can be taught alone or as an epilogue to "Impact Makers (A): The Newman's Own of Management Consulting" (UV7805). The case is based on Impact Makers, an IT consulting company headquartered in Richmond, Virginia. The company focus on creating value for a community led to an innovative corporate structure where original founders of the firm hold all voting rights, while the cash flow rights belong to two nonprofits, setting the stage for a Newman's Own model of management consulting. The case asks students to evaluate whether a board member should invest in Impact Makers' growth effort. The case opens with Impact Makers seeking up to $3 million in preferred-equity financing to grow its geographic presence, expand areas of practice, and convert intellectual property into tools that would increase margins and profits in digital health care markets. The protagonist, David Wade, is a rational mainstream investor. Yet he is a strong supporter of the company who had participated in previous company (bridge financing) debt offerings. The material requires students to explore the expected return of the proposed offering and evaluate the implicit and explicit discounts Wade would be making if he invested.

In April 2012, a chartered accountant and financial analyst for the manufacturing firm SRF Limited was asked by her chief financial officer to analyze the company's cash dividend and share repurchase policy and provide recommendations for the next 12 to 24 months. SRF Limited was a ₹38 billion multi-business entity. Having completed its third round of share buyback at ₹380 per share, SRF Limited paid an interim and consistent dividend of ₹7 per share. The company had engaged in a series of share buybacks since 2006. In light of India's falling economic growth and pessimistic global economic outlook, the company needed to know if it would be able to maintain its growth. Should the company go ahead with another round of share buybacks and increasing dividends?

In April 2012, a chartered accountant and financial analyst for the manufacturing firm SRF Limited was asked by her chief financial officer to analyze the company’s cash dividend and share repurchase policy and provide recommendations for the next 12 to 24 months. SRF Limited was a ?38 billion multi-business entity. Having completed its third round of share buyback at ?380 per share, SRF Limited paid an interim and consistent dividend of ?7 per share. The company had engaged in a series of share buybacks since 2006. In light of India’s falling economic growth and pessimistic global economic outlook, the company needed to know if it would be able to maintain its growth. Should the company go ahead with another round of share buybacks and increasing dividends?

This case asks students to prepare a report comparing the financial and operating performance of AT&T and Verizon. Taking the perspective of a communications industry analyst, they must also consider the differences between and implications of the companies' business strategies and the differences between the technology and growth rates of the wireless and wireline business segments. As part of this exercise, students reorganize the balance sheets in terms of operating and financial components, calculate changes in working capital, derive un-levered free cash flow (FCF), and apply DuPont style ratios and margin analysis on a consolidated-as well as a segment-basis. Students must also consider the effects of actuarial gains and losses on operating results; and how analysts might adjust for those effects. The case was designed for first-year MBA students in financial statement analysis (FSA) and accounting classes, but it could also be used in other courses to prepare for discounted cash flow (DCF) exercises.

Spreadsheet supplement for case 917543.

This Reading introduces basic elements of the structure and process for mergers and acquisitions transactions, arising from markets, custom, and law. It introduces important characteristics of typical M&A transactions, such as deal structure, elements of M&A contracts, and reasons for and effects of a typical deal process. No prior knowledge or reading is necessary.

Student spreadsheet for case W16834.

This reading provides a solid foundation and consistent knowledge base for understanding the key insights from options theory. It begins by developing terminology and a framework for understanding the contractual rights and obligations embedded in financial option contracts. The framework is used to map out the future cash flows (payoffs) associated with specific types of option contracts. Using the associated payoff functions, the value of an option contract is motivated as the present value of the option's expected future payoffs and is derived as the value of the portfolio of securities that would replicate those payoffs. The reading then examines how option contracts can be combined to provide specific desired payoffs (hedging). The reading shows how the Black-Scholes formula extends the framework. Discussion of the model includes intuition, insights about parameters, and numeric examples. Finally, several corporate finance applications are discussed, including accounting for the cost of employee stock option grants, understanding and valuing contractual terms of an acquisition offer, and determining an appropriate yield-to-maturity on new corporate debt issue.

Set in late 2016, this case recounts the remarkable performance record of Blue Chip Growth Fund (BCGF), a mutual fund managed by Larry Puglia at T. Rowe Price, Inc. The case describes the investment style of Puglia, whose record with BCGF had on average outperformed the S&P 500 since the inception of the fund in 1993. The tasks for the student are to assess the performance of the fund, consider the sources of its success, and decide on the sustainability of Puglia's performance. Consistent with the introductory nature of the case, the analysis requires no numerical calculations. The instructor should not be deceived, however: the absorption of capital-market background and the implications of financial concepts in the case will fully occupy the novice. This case updates and replaces "Bill Miller and Value Trust" (UVA-F-1481) and "Peter Lynch and the Fidelity Magellan Fund" (UVA-F-0777). The case is intended for use in the opening stages of a finance course. It provides a nontechnical introduction to the U.S. equity markets and lays the foundation for some basic concepts in finance.

Student spreadsheet for case UV7288.

Behavioural economics, a relatively new branch of study, formally began in the 1980s and has garnered increasing attention from economists and neuroscientists since. Behavioural finance, a subfield of behavioural economics, attempts to explain financial market-related behaviour. This note introduces behavioural finance by providing an overview of fundamental behavioural economic theories and empirical findings, including more recent findings that have expanded the breadth of the field. It also outlines strategies for correcting irrational financial behaviour.

Student spreadsheet for case HK1136.

A financial advisor located in Hong Kong is requested by local clients for investment instruments with exposures to China stocks. He recommends several mutual funds of Value Partners. Value Partners is one of the largest asset management companies in Asia, and already has several funds investing in China stocks. To help customers decide which fund to invest, how should he evaluate and compare the performance of these funds? Which fund better satisfies the investment demand of each client?

Data Sheet for #ST52A.