Winfield Refuse Management, Inc. was a small, publicly traded waste management company with a regional footprint in the Midwest. Founded in 1972, the company grew both organically and through small acquisitions. As larger competitors in the waste management industry consolidated smaller players and benefited from economies of scale, Winfield sought to maintain its competitive position by acquiring MPIS, a larger, more ambitious target. The acquisition of MPIS would require external financing, but the company had long followed a policy of avoiding long-term debt. However, Winfield management and some members of the board questioned this strategy and argued that issuing debt might be preferable to a stock issuance.

Procedure

Read the case study, “Winfield Refuse Management, Inc.: Raising Debt vs. Equity” from the Harvard Business CoursePack.

After reading the case study, complete a cash flow analysis of debt vs. equity financing, and demonstrate that you understand the implications of this analysis.
Create a letter to Mamie Sheen advising her on what course of action she should recommend. The letter should contain four sections: introduction, your findings, your recommendations, and a conclusion.

Your letter should address at a minimum these questions:
What are the differences in cash flow requirements between the two options?
What are the deciding or most relevant criteria by which to evaluate and recommend a path forward?
How should she argue her case to neutralize objections?
What actions should Mamie take to minimize her risks given her recommended path forward?