Irving Mills Case

Irving Mills is a strong participant in the printcloth market, with a management team recognized for its acumen and a market position that puts it among the leaders in the industry. The company has approached a bank regarding funds for a leveraged buyout (LBO); the bank is now considering the request. In order to assist in preparing an answer, the PRISM analysis structure will be used.

Irving Mills management is recognized as being among the "best in the business," and it is characterized by long-term participation by its managers and owners. Bill Stonewall has been with the company for 50 years and is the grandson of Irving's founder. Stonewall's ties are based on emotion as well as a sense of loyalty to the company, but his age suggests that he is likely to retire shortly after the LBO in order to enjoy the fruits of his life's work.

Goodman, who has been with the company for more than 30 years, is another descendant of the Irving's founder, and represents a strong family tie to the organization. He has a strong educational background, and can be expected to remain with the company for a reasonable amount of time following the LBO since he will be the vice-chairman of the company.

However, the management reins will pass to Harrison in terms of the day to day operations of the firm. Harrison has no family ties to the organization and has only been with the company for four years. While she can be expected to perform well given that she has

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ng due to the company's past history of repayment, its strong position in the industry, management acumen and the historic sales growth that the company has enjoyed. Intention The intention of the proposal is to finance a leveraged buyout which would result in the shifting of ownership of the company. In short, the loan will replace current equity with debt. This represents a strong level of risk to the lender, but also carries with it the strongest potential for reward. Irving Mills is a highly successful competitor in the market, and its continued success would certainly be a boon to its buyers, who obviously see the potential that the company has and who want to take advantage of that potential. The leveraged buyout is a long-term situation that is dependent on a variety of factors that are outside the buyers' control. Economic factors, international competition and the availability of labor will all contribute to the ability of Irving to meet its commitment. Past experience indicates that Irving is able to repay its debt, but the LBO represents the longest relationship that the company would take on with its creditors. A downturn in the market, a recession, or other negative factors would all have a serious effect on

Category: Business - I