Currency Machines Incorporated

Abstract

John Stuve was a finance professor who had recently moved to Charlotte, North Carolina and started a new job at a local university. Just after moving to the area, John met Steve Finley at a church social event. Steve asked John if he would be interested in doing a firm valuation for the family business, Currency Machines Incorporated (CMI). Steve had started working for CMI in 2002. Steve’s father, James Finley, was thinking about retiring and Steve was considering buying the business. However, the Finley’s did not just want to know what the firm was worth. They needed more information as they had discussed a succession plan where Steve’s father, James, was going to give Steve an amount equal to half the incremental growth of the firm that had taken place since he was hired in 2002. John Stuve was confident he could derive the value of the firm at different points in time, but he had some nagging questions. What assumptions were underlying his analysis? Did the difference between these two numbers accurately represent Sean’s contribution to the firm? And was this really a good succession plan?