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UrsaNav: the power of the bear

Susan White (Department of Finance, University of Maryland, College Park, Maryland, USA)
Karen Hallows (Department of Finance, University of Maryland, College Park, Maryland, USA)

The CASE Journal

ISSN: 1544-9106

Publication date: 28 October 2019

Issue publication date: 22 November 2019

Abstract

Theoretical basis

Students will need to know basic capital budgeting techniques to value UrsaNav and its divisions. Students must determine which cash flows are relevant and determine an appropriate return on investment. Some of the issues that need to be addressed include: how to handle taxes in a discounted cash flow analysis when valuing an S Corp. where incentives depend on current (known) tax provisions and future (unknown) tax provisions; how to use comparable multiples to develop a cost of capital for a DCF valuation; and how to value a firm using comparable transactions.

Research methodology

Case information was obtained through interviews with the owner, Charles Schue. In addition, the authors researched industry and comparable company data, along with current events relating to government consulting.

Case overview/synopsis

UrsaNav is a US-based, international provider of advanced engineering and information management consulting services in the naval navigation industry. After about a decade of operating and growing, the firm had become successfully diversified; however, it had also grown too large to manage effectively. Thus, the company was spun-off into three separate segments: Tagence, Geodesicx and UrsaNav. These segments went “back to the basics,” and focused more on serving customers, with each having a more defined company focus. Is this a move that creates or destroys value? How could it create value for the firms’ founders?

Complexity academic level

This case is intended for an advanced undergraduate or an MBA corporate finance class or an entrepreneurship elective. Students interested in analyzing whether or not decision makers within a company would want to spin-off divisions, or merge with another company, or divest a company would find this case appealing. Other students who just want to analyze whether the company has grown too much would be good candidates to do this case.

Keywords

Acknowledgements

Disclaimer. This case is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources.

Citation

White, S. and Hallows, K. (2019), "UrsaNav: the power of the bear", The CASE Journal, Vol. 15 No. 6, pp. 575-606. https://doi.org/10.1108/TCJ-10-2018-0109

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited