Case Study Mile High Tree Farm Company

Topics: Marketing, Customer service, Management, Sales, Employment, Strategic management / Pages: 3 (659 words) / Published: Jul 31st, 2015
After our discussion, we recommend that John and Mark should not sell the Mile High Tree Farm Company now. And our conclusion is based on the following reasons.
1) First and foremost, Mile High Tree Farm has great potential development room if it continues to operate. And Tree Farm Company has already did a good job on building its value such as revenue growth, sustainable cash flow, reputation, customer concentration, and employee quality. The company’s primary market focus was the Denver metropolitan area where it had five major competitors. Both John and Mark believed the company compare favorably to these five competitors on price, number of locations, quality, complementary products, and customer service. Besides, relying on growing its
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Mile High has received a recent offer from U.S. Home to provide its new homebuyers personalized landscaping packages. Successful companies in the future would be large multi-location nurseries that also grew some for their own products for sale. If this relationship worked in Denver, then Mile High could expand it to U.S. Home’s other Colorado building locations if Mile High had nearby locations. John and Mark estimated that each such homeowner package could generate EBITDA of $3,300, projected incremental EBITDA of $1 million per year for each new location from the U.S. Home contract. U.S. Home did not like working with many vendors, and if Mile High continued to do a good job on the custom packages, U.S. Home agreed to use the company as it built new homes in other cities. This offer would also bring a lot of profits to Mile High. Although Mile High has its own products, but its locations for nurseries are …show more content…
If Mile High does some changes such as add design and consultation services and establish a landscaping division, it can adapt to new competition environment, which brings about future earnings.
6) Right now, John and Mark didn’t figure out a workable exit strategy. If they sell Mile High now, potential buyers might think there are some problems in this company and won’t give a high price.
7) Based on our suggestion, the business value for the possible auction is $8,324,026 which is the median number of all our business valuation number. The total assets for the company is above $4.8 million and the company doesn’t have much liability. We believe that based on the company’s good performance these years, the company can develop more business value and sell for better price.
Other Alternatives:
1) Hire suitable people to manage this

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