Marcie Overstreet had begun her specialty vitamin-manufacturingfirm 7 years ago, before the craze over supplements began. Shedeveloped her multi-vitamin based upon her regimen for fitnesscompetitions in which she had been a highly celebrated champion formany years. Her startup was modest, producing revenues of $125,000($70,000 net profit) in the first year. She decided to expandrapidly using debt and cash flows to grow to revenues of$10,000,000 ($4,500,000 net profit) by her 6th year.While her firm could be considered highly leveraged, the cash flowsmore than covered the interest and she enjoyed the autonomy thatdebt financing kept in place. By the end of the 6th yearher debt in the firm was $10,000,000 ($2,000,000 long-term). Thebook value of $12,000,000 is deceiving in that most of herequipment was listed as fully depreciated. She has 75 employees (50full time and 25 part time). At this time her productioncapabilities have been maxed out and she has backlogged orders thatwould indicate a 20% increase in production capacity would beneeded to adequately meet the demand. In order to accomplish this,another round of financing will be needed to expand to the “nextlevel”. In addition, she believes that the company could be quitesuccessful in the healthy foods arena if given proper level offinancing for production equipment and market entry advertising. Atage 55, Marcie really isn’t sure that she wants to continue thepace that she has been keeping for the past 7 years. Her children,one 25 and the other 23, have no interest in the business otherthan enjoying the lifestyle it provides them. The overall markethas been expanding at an annualized rate of 16% over the periodwith last year’s rate at an all time high of 22%. She wants to becertain that she doesn’t regret getting out of the industry at thewrong time and missing a profit opportunity, however, she wants toenjoy the fruits of her labor while she is still relativelyyoung. Discuss her situation…what are her options?Which would you advise her to select and why?
