Case Name :      Rocky Mountain Advanced Genome (v. 1.3)

Authors :           Robert F. Bruner

Source :             Darden School of Business

Case ID :           UV0005

Discipline :        Finance

Case Length :    20 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

In January 1996, an investment manager of a hedge fund is considering purchasing an equity interest in a start-up biotechnology firm, Rocky Mountain Advanced Genome (RMAG). The asking price is $46 million for a 90% equity interest. Although managers of the firm are optimistic about its future performance, the investment manager is more conservative in her expectations. She asks an analyst to fashion a counterproposal for RMAG’s management. The tasks for students are to apply the concept of terminal value, interpret completed analyses and data, and derive implications of different terminal-value assumptions in an effort to recommend a counterproposal. Little computation is required of the students.