Possible ‘qualitative’ Factors That Warren Hamer Should Consider When Considering the Purchase of Paint-Pen Inc

Can you discuss three possible ‘qualitative’ factors that Warren Hamer should consider when considering the purchase of Paint-Pen Inc. In reference to these factors include both positive and negative factors if appropriate with a brief justification of your view

Qualitative Factors –

• Management: As per the case, there was no surety of the present management being staying with the company post acquisition by Warren Hamer. This could be seen as a worrying sign as if the management is not assuring its stay then it may signify that there could be some concerns regarding the business. This can be considered as a negative factor as if the management which is giving a steady volume and profit growth for the last 5 years does not give assurance to stay with the company which shows a bad sign towards potential bidder regarding the business

• Bidding/selling process: As per the terms and conditions of the sale, potential bidders are not allowed to contact distributors of the company and there was a clause in the contract which called for forfeiture of the deposit amount (5%). This can be considered as a way of not allowing bidders to get more insights of the company to arrive at a fair valuation. This can also be considered as a worrying sign as the distributors would be more aware of the business conditions and insights from them could uncover some problems that the company might be facing with the distributors. This also shows that could be a transparency problem with the company regarding its distributors. Also, the information shows that the process of inviting bids was too fast which again signifies that there might be some problem with the company. All this can be considered as a negative factor for the bidder.

• Sales technique and revenue system: The party planning sales technique can be considered as a plus point for the company as it helps in increasing its potential customer outreach as well as its potential customer base with minimal advertising costs. Also another factor that can be considered is that they sold their products through distributors thus allowing them to reduce their burden of selling. This can be attributed as a positive factor.

• Sales and Industry Benchmark: As per the given information, Paint-Pen’s sales were larger than any of its six competitors. This is after considering the fact that other three companies were also following ‘house-party plan’ to increase the acceptance of their products and given the success of the plan, Paint-Pen was able to capitalize in a better way and gain competitive advantage. Also, Paint Pen competed with firms on a significantly greater scale and resources and has shown a consistent growth throughout the years. This can also lead to company being considered as an ‘Industry benchmark’. This can be attributed as a positive factor