Compass Maritime Services, LLC: Valuing Ships

Posted: 7 Feb 2012

See all articles by Benjamin Esty

Benjamin Esty

Harvard Business School

Albert Sheen

University of Oregon - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: December 6, 2010

Abstract

Tom Roberts, a founding partner of Compass Maritime Services, a New Jersey-based shipping research and consulting firm, has been asked by a new potential customer in May 2008 for advice on purchasing a capesize bulk carrier. After identifying a suitable ship with his colleague Basil Karatzas, they must determine an appropriate offer price for the ship and justify their recommendations.

Learning Objective: This case is designed for introductory finance, quantitative methods, econometrics, or microeconomics courses. It is designed to accomplish four objectives: 1) Teach basic valuation analysis using comparable transactions; 2) Teach basic regression analysis (both simple and multiple regression); 3) Illustrate how regression analysis can be used to help make important investment decisions (bulk carriers cost on the order of $100-$150 million); and 4) Illustrate the importance of integrating managerial judgment with analytic tools in determining an appropriate acquisition/offer price and in making a set of recommendations to potential customer.

Suggested Citation

Esty, Benjamin C. and Sheen, Albert, Compass Maritime Services, LLC: Valuing Ships (December 6, 2010). Harvard Business School Finance case no. 211-014, Available at SSRN: https://ssrn.com/abstract=2000845

Benjamin C. Esty (Contact Author)

Harvard Business School ( email )

Boston, MA 02163
United States

Albert Sheen

University of Oregon - Department of Finance ( email )

Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States

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