Week 3 Case Assignment

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Feb 20, 2024

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Case Assignment Week 3 Medlink and RMG Lauralee Conklin Entrepreneurship GEB1112 Dr Turner 1. Before RMG acquired Medlink, the firm was cash-flow positive. Why do you think that changed with the acquisition of Medlink? Numerous factors contributed to the decreased cash flow RMG experienced once it acquired Medlink, such as poor financial performance and strategic misfit. The acquisition of Medlink required RMG to invest significant money into the company to cover its initial costs. The costs associated with integrating the two firms were in addition to those incurred by RMG. This capital investment increased the need for cash flow and strained RMG's resources. Additionally, the integration process was complex and costly and included costs associated with restructuring the company, training employees, and marketing the combined company. As a result, RMG was left with a combination of high initial costs and a need for increased cash flow to sustain operations and continue its growth trajectory. This presented a significant challenge to the company, and its impact was reflected in its 2014 financial results (Longenecker et al., 2022). 2. Do you think Nelson should sell Medlink? Why or why not? There are several factors to consider when determining whether Nelson should sell Medlink. It is imperative for Nelson to weigh the pros and cons before making a final decision. He has several advantages to selling the 30 percent stake he owns. These include IBM's willingness to pay the $50 million price. In addition, he can cash out with the business angel with whom he was partnered. Furthermore, leaving the business before sales decline (Longenecker et al., 2022).

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