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MEMORANDUM
To: Sang Hongli
From: Peter, Class 2, Student 21
Date: May-28-2011
Subject: Whether this a good time to sell OLC.

Background:

Dr. Nick Whitehead is president and CEO of the London, Ontario-based Oxford Learning Centre Inc. (OLC), Lewis CEO of Childtime Learning Centers (Childtime), asked Whitehead to come to Michigan to talk to the directors of Childtime about an offer to purchase a significant stake of OLC. Dr. Whitehead wondered how he should prepare for the upcoming negotiations.

Issue:

In order to determine OLC’ cost of capital for the discounted cash flow valuation, we can collect recent financial market date.

Solution & Implementation:

Dr. Whitehead has three reasons to reject the FirstService: first, he did not think that the purchase price was sufficient. Second, he did not think that there was a good corporate “fit” Third, FirstService would not support OLC with much need management resources.

Dr. Whitehead was intrigued with Nobel Education Dynamics, but Nobel had only offer to purchase OLC for 5 times EBITDA, Dr. Whitehead primary concern was the purchase price, he therefore believed that OLC should be value at a higher multiple. Whitehead did not think this would provide as a good a fit.

Dr. Whitehead believed that a strategic partnership with some U.S. company was the best alternative to facilitate growth in the North American market. So he approached Harold Lewis, CEO of Childtime Learning Center. Whitehead believed to have lower growth potential, analysts were beginning to base valuations on forward-looking EBITDA multiples in the 7 to 8 range. The purchase price was still not high enough.

There are not provide as a good a fit. OLC’s growth has been strong and it have sufficient revenues in a year or two to make it an attractive initial public offering. If he

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