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Case
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Reference no. 9-202-044
Subject category: Finance, Accounting and Control
Authors: Mihir A Desai (Harvard Business School); Mark F Veblen (Harvard Business School); Frank Williamson (Harvard Business School)
Published by: Harvard Business Publishing
Originally published in: 2001
Version: 7 November 2001
Length: 21 pages
Data source: Field research
Topics: Financial management; Management controls; Accounting; Due diligence; Valuation; Mergers & acquisitions
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Abstract

Provident Life & Accident Insurance Co. has made an initial bid to acquire a primary competitor, Paul Revere, from conglomerate, Textron. The due diligence process uncovers a significant block of problematic disability insurance policies. Provident is forced to assess the negative impact of this discovery on its initial valuation and revise its bid. In the process, the divergent views of the evolution of these policies by the bidder and seller have to be translated through discounted cash flow analysis into appropriate bid prices. Finally, this DCF analysis, in combination with multiples analysis, is used in negotiations with Textron and public shareholders.
Size:
2,000 employees, $2,555 million revenues
Other setting(s):
1996
Teaching note
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Reference no. 5-202-046
Subject category: Finance, Accounting and Control
Authors: Mark F Veblen (Harvard Business School); Mihir A Desai (Harvard Business School); E Scott Mayfield (Harvard Business School)
Published by: Harvard Business Publishing
Originally published in: 2002
Version: 7 November 2001
Length: 28 pages
View full details

About

Abstract

Provident Life & Accident Insurance Co. has made an initial bid to acquire a primary competitor, Paul Revere, from conglomerate, Textron. The due diligence process uncovers a significant block of problematic disability insurance policies. Provident is forced to assess the negative impact of this discovery on its initial valuation and revise its bid. In the process, the divergent views of the evolution of these policies by the bidder and seller have to be translated through discounted cash flow analysis into appropriate bid prices. Finally, this DCF analysis, in combination with multiples analysis, is used in negotiations with Textron and public shareholders.

Settings

Size:
2,000 employees, $2,555 million revenues
Other setting(s):
1996

Related

Teaching note
-
Reference no. 5-202-046
Subject category: Finance, Accounting and Control
Authors: Mark F Veblen (Harvard Business School); Mihir A Desai (Harvard Business School); E Scott Mayfield (Harvard Business School)
Published by: Harvard Business Publishing
Originally published in: 2002
Version: 7 November 2001
Length: 28 pages
View full details