Burton Sensors, Inc. Harvard Business School
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Case 1: Burton Sensors, Inc.
1. Should Marshall continue to pursue high-growth strategy? How can she finance it?
What is the potential effect of growth on Burtons stock price?
2. Should Marshall purchase the thermowell machine? In calculating the WACC, use 6% as the equity risk premium.
3. Should Marshall accept the offer of the private investor and issue new equity? How does
the deal affect Burtons existing shareholders? What is the effect of the issuance on Burtons balance sheet?
4. Should Marshall acquire Electro-Engineering, Inc. (EE)? What is the most important consideration? Even if the NPV of the acquisition is zero, should she still proceed?
5. Does the acquisition allow EE to gain enough funding to invest in the purchase of thermowell machines?
The first page will include the Executive Summary. Which will state the problem faced by the company, and your recommended solution and why? Supported by some numbers that you had calculated in the body of the case. The other 10 pages will address the questions and include the Excel with the calculations files, fully explained and readable.
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