Spring 2014 GWU MBAD 6211 HC Case: Colonial Back Crackers

Spring 2014 GWU MBAD 6211 HC Case: Colonial Back Crackers Colonial Back Crackers is a small physical therapy practice in the Washington DC area. Colonial has been in business for several years focusing on providing PT services and products. George, a GWU MBA grad, founded and continues to run the business.

For various reasons including new entrants in the PT space and margin compression from reduced payments from insurance companies, Colonial become unprofitable and started to have cash flow problems. George, with two kids about to enroll as freshmen at GWU, sought a buyer for Colonial. Because of George’s superior connections through GW, he found a buyer in 3 months; Buff Out Your Pain.

Buff, a large regional provider of physical therapy and pain management, asked to see Colonial’s financial statements.

Colonial’s Current Financial Condition

Here are the current book and market values of Colonial’s assets and liabilities, which Buff is interested in acquiring. Against these assets are claims of suppliers and bank loan used to finance a portion of the inventory. Buff hired a valuation consultant for Colonial’s tangible assets and liabilities.