Reference no: EM132144803

Marcie Overstreet had begun her specialty vitamin-manufacturing firm 7 years ago, before the craze over supplements began. She developed her multi-vitamin based upon her regimen for fitness competitions in which she had been a highly celebrated champion for many years. Her startup was modest, producing revenues of $125,000 ($70,000 net profit) in the first year. She decided to expand rapidly using debt and cash flows to grow to revenues of $10,000,000 ($4,500,000 net profit) by her 6th year. While her firm could be considered highly leveraged, the cash flows more than covered the interest and she enjoyed the autonomy that debt financing kept in place. By the end of the 6th year her debt in the firm was $10,000,000 ($2,000,000 long-term). The book value of $12,000,000 is deceiving in that most of her equipment was listed as fully depreciated. She has 75 employees (50 full time and 25 part time). At this time her production capabilities have been maxed out and she has backlogged orders that would indicate a 20% increase in production capacity would be needed to adequately meet the demand. In order to accomplish this, another round of financing will be needed to expand to the “next level”. In addition, she believes that the company could be quite successful in the healthy foods arena if given proper level of financing for production equipment and market entry advertising. At age 55, Marcie really isn’t sure that she wants to continue the pace that she has been keeping for the past 7 years. Her children, one 25 and the other 23, have no interest in the business other than enjoying the lifestyle it provides them. The overall market has been expanding at an annualized rate of 16% over the period with last year’s rate at an all time high of 22%. She wants to be certain that she doesn’t regret getting out of the industry at the wrong time and missing a profit opportunity, however, she wants to enjoy the fruits of her labor while she is still relatively young. Discuss her situation…what are her options? Which would you advise her to select and why?