In the given case, the TX needs a $5 million investment in order to expand their business and the Valhalla Partners wants to take a decision whether investment is to be made or not. In my opinion, Art Marks should vote to make an investment in Telco Exchange. The most important merit of the TX is that they have a wide network of supporting customers who use company’s software to solve their several problems. Customer support is an invaluable competitive advantage to any organization whether it is a software company or a trading industry; and the modern marketing tactic gives great emphasis on customer satisfaction. Since the TX has a wide network of sound customers, the $5 million investment of Valhalla partners can surely make use of the high market demand. In addition to the customers’ support, the TX has good relationship with some worldwide leading companies. It helps the firm to provide outstanding services to their customers. Even though the TX’s management is inefficient, this demerit can be overcome through the strategic intervention of Valhalla partners.
The investment memo prepared by Scott Frederick points out certain risk factors that are persisting in TX. The ratio of company’s revenue to Valhalla’s revenue is 67.9%; and there is no proportional increment in the case of Net income which is only 40.6%. The decline in net income indicates the increase in expenditure which is obviously a risk factor. Even though they build tools to cover the deficiency of automatic network discovery, it may cause to raise additional expenses. Similarly, Columbia Capital also has an investment in TX which would reduce the scope of Valhalla Partners’ effective involvement. Moreover, inefficiency of management is demonstrated throughout the investment memo.
Valhalla’s due diligence is a scientifically and efficiently developed process which helps the firm to confront with the competitive world of