Capital Mortgage Case

632 Words3 Pages
Solution CMI is aware of CTS’s financial position; and they seem to have the upper hand in the negotiation process. On focusing on its relationship with Elliot Burr CMI has as well modified the outcome of the acquisition. Intentionally it was to agree on a price that is acceptable by the parent company. CMI can start out May 24th negotiations with CTS after considering a solid strategy that addresses the following point to CTS. 1. Reassuring the partners of CTS regarding their personal investment’s security. 2. Describing the ROE projecting by Dolan made for MetroNet’s third-party equity committee meeting to CTS. 3. Taking CTS into confidence that CMI would turn them around. It seems that CMI does not want to spend more than $600,000 along with the book value of CTS? Frank Randall indicated CTS’s worth is around $625,000. Capital Mortgage Insurance’s parent company has approved a budget of nine million for the acquisition a large amount. The priority of CTS is to sell CTS at a best price possible. Another priority of CTS is to satisfy any concerns regarding ownership stake after the acquisition has been completed. Its understandable that they want to ensure their returns, which can only be possible, if they have a partial ownership in the new company. The purpose of CMI purchasing CTS is to fulfill the MetroNet’s approved and proposed vision. Osgood has many concerns, which include long-term viability and health of MetroNet. Because of the uncertainties in the housing industries and monetary system, and Merrill Lynch’s introduction into the market it had made the realtors reluctant and as per Randall’s views it was sufficient for CMI to present some familiar and comforting alternative. CTS's management can be seen as eager to be acquired by CMI. And vice versa CMI was eager to acquire CTS. The case states that CTS was under a struggling financial position and

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