Shaker Circuits A-B

Babson Professor Bill Bygrave, Case Director

Scott Wipper and Dan D'Heilly, Case Writers

Arthur M. Blank Center for Entrepreneurship

© Babson College, 1995.

Abstract

This case focuses on the buy-out of a private printed circuit manufacturer. Friends from childhood, David Gray and Peter Mullin want to go into business together. They decide to buy a manufacturing company. The case examines their due-diligence, deal negotiations, and valuation. It asks students to value the company using several different methods and to formulate a maximum offer price. Also considered is whether Gray and Mullin should purchase the company and how the deal should be structured. The (B) case reveals that David and Peter purchased Shaker Circuits just prior to a major industry consolidation. They had several difficult years but reached break-even, only to find themselves faced with a strategic dilemma: to keep making integrated circuits, the company needed an additional $250,000 investment. Students are asked if they should invest in this increasingly competitive industry, or close the business with a $1 million loss. Today, David and Peter have a highly profitable, debt-free printed circuits brokerage business. By asking, "What business are we really in?," Peter and David were able to reposition Shaker Circuits as a "high-quality, on-time" distribution channel.

Location of the company: Cleveland, Ohio

Years spanned by the case: 1989 through 1990

Industry segment: Integrated circuit board manufacturing

Stage of the company: Maturity and renewal

Age of the entrepreneur(s): 30s

DVD

A 34-minute DVD is available for this case. It is a presentation to Babson MBA students by the case principal. Please place video orders through ecch.

Teaching Notes

A 14-page case teaching package, written by Joel Shulman and Dan D'Heilly, is available for this case. The teaching package includes the (B) case as well as strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into a course.