Entrepreneurial Finance and Private Equity

Class #9 – Tuesday, November 12, 2002

Problems of Down Markets

Case: Phoenix Capital and IntelliVoice

Network File: Phoenixcapital.xls

Guest Speaker: John May, Managing Director, New Vantage Group

1. What value could IntelliVoice potentially receive if it were sold for its current post-money valuation?

2. What value could IntelliVoice potentially receive if it were sold to a strategic buyer in the market?

3. How much would the values potentially received in questions 1 and 2 help Phoenix’s rate of return?

4. If George Kostanza decides to keep Intellivoice how much, if at all, should he invest of the $5 million needed? What factors should he take into account when deciding whether or not to invest further in IntelliVoice?

5. Based on current market conditions and IntelliVoice’s future prospects, what would be your recommendation to Kostanza? What is your plan for dealing with the fund’s limited partners?