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Westlake Lanes

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Shelby Givens’s perspective
Executive Summary
Givens has decided to present to the board a new business strategy for Westlake Lanes’ future: an Upscale Bowling Lounge. She will be presenting this option as the best choice to maintain and expand the business, and will suggest issuing equity to new shareholders to finance the investment.
The alternatives
Options considered: (1) stand pat, (2) sell, (3) liquidate, (4) Kid-friendly and Upscale Bowling Lounge ideas. The main criteria used to evaluate these are: (a) financial impact, (b) Westlake legacy’s continuation, (c) personal fit for Givens.
(1) Stand pat: the initiatives undertaken in 2009 will allow Westlake to close 2010 with a net income of $112k (Exhibit 1). This brings the business back to profit after 3 years and could allow the board to get the $100k back within 2-3 years, if the trend is sustained. This option would allow the business to continue with the legacy inherited from Dane Sugar. However, we can assume that the current business model has hit maturity, and this could hinder the business from performing substantially better in the short/mid-term. Furthermore, this option would not be a good fit for Givens, since she is looking to leave her own mark on the business, and has a strong entrepreneurial spirit. This idea, although feasible, would de facto frustrate Givens’s growth plans and potentially lead to her exit from the venture.
(2) Sell: the continued losses over the last 3 years and the deteriorated Debt/Equity ratio in recent years (Exhibit 2) do not set the stage for the sale of the business at a good price. Therefore, this idea will be discarded.
(3) Liquidate: Exhibit 3 shows that the cash collected from the asset sale ($134k) would not cover the existing liabilities ($154k), even if the ‘shareholders loan’ is included in the Common Stock line. Hence, this option would not be advisable

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