Nantucket Nectars Exit Study Case Study

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The company, Nantucket Nectars has a variety of options available that will help determine their future. The information in the case study directs focus on the decision to either sell, go public, or remain independent. The managers appear comfortable with any option listed. Still, in order to make the best decision, pros and cons for each must be made.
Should the company go public, they must go through the process of having an initial public hearing. This could lead to numerous benefits. One of which is a new source of capital that can be used to invest in the company. Instant capital funding allows Nantucket Nectars to grow and settle some past and future debts. If the company plans to grow, they will need more liquid capital to do so.

An IPO by going public would allow the current management to remain (Acharya & Xu, 2017). Scott for example, would continue with the strategies designed for the company and allow for increased brand awareness than going public offers. The memorable and quirky aspect of Nantucket Nectars may increase positivity for the company and continue to allow it to successfully market to a new audience.

The cons however, lie in the potential new investors the company will be responsible for as the company begins selling stock. These investors must be clued in on the direction of the company periodically each year (Triarc for example, may replace staff should they buy). They must also allow for additional input from major investors and deal with governing bodies related to stocks and bonds. Such effort could prove to be stressful...…ownership stake to a buyer interested in allowing NN to pursue its goals like it did in its initial phase of investment and remain as advisors.

The revenue for NN from 1994 to 1996 almost doubled each year. Going from $8,345 to $29,493. The gross profit almost tripled from 1994 to 1995 and doubled from 1995 to 1996. The EBITDA for 1996 was 969 (Lassiter III, Sahlman, & Wasserman, 2014). If NN sees sales in supermarkets, which the company has seen no to low expansion, its sales could increase dramatically, adding further value to the company. As a standalone company, NN may be worth $65,226 (valuation in $000s). The company’s market value will grow at least three times much (assumptions), if it is sold to another company and investments are made for growth.

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