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Lady M Confections Case Study

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SUMMARY: Lady M. Confections, a specialty cake bakery received an offer of $10 million and a line of credit in May 2014 from a Chinese Investor in return for an equity stake in Company and exclusive franchising rights in China. Also, at the same time, the Company was contemplating opening a new boutique at the new World Trade Center, New York which is a highly prestigious and iconic location but also very costly with annual rent alone at $310,600. ANALYSIS This case is about a specialty cake bakery, Lady M. Confections. This case deals with the valuation and financing of this Bakery. Problems in case: There are primarily three main problems in this case. Firstly, the problem involves the decision regarding the opening of a new boutique at the new World Trade Center, New York City. Ken Romaniszyn, GMP and Daisy Tom, CFO of Lady M. Confections had to make a decision about whether to open the new boutique or not. …show more content…

Confections. This is very important considering that a lot of investors are showing a great interest in the Company and Lady M. needs to know its true worth before it thinks about raising finances. The third problem in this case is about whether to accept the offer of Chinese Investor or not. This means whether the offer is worth considering or not. Problem 1: The first problem deals with decision regarding whether to open a new boutique at the World Trade Center or not. For making this decision we will use the Break-Even Analysis. We have to determine the number of units that Lady M needs to sell each day at the proposed boutique at World Trade Center to make it profitable in the first year. Analysis of Problem

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