Kohler Co.

Posted: 9 May 2005

See all articles by Belen Villalonga

Belen Villalonga

New York University (NYU) - Leonard N. Stern School of Business

Raphael ('Raffi") H. Amit

The Wharton School UPENN

Date Written: March 7, 2005

Abstract

SUBJECT AREAS: family owned businesses, valuation, recapitalization, stockholders

CASE SETTING: April 2000, plumbing fixtures industry, Kohler (Wisconsin, U.S.A.)

Kohler Co., best known for its plumbing fixtures, is a large private family firm. As part of a recapitalization aimed at preserving family ownership of Kohler Co., non family shareholders, who held 4% of the common stock, were required to sell their shares to the company. A group of dissenting shareholders filed a lawsuit claiming that the buyout price undervalued their shares by a factor of five. In April 2000, Herbert V. Kohler, Jr., Chairman and CEO, has to decide whether to settle with the dissenters and, if so, at what share price. The decision calls for a detailed valuation of the company at the time of the recapitalization. The case provides the necessary data for students to value the company using both a discounted cash flow approach and a multiples (comparable companies) approach. Students are required to identify and understand the different valuation assumptions that can lead to a wide range in prices, including the applicability of discounts for lack or marketability and lack of control. Exhibits are available in electronic form to facilitate the analysis of the data (HBS Courseware No. 205-707). Teaching purpose: Valuation of privately held firms from the perspective of both the controlling shareholder(s) and minority shareholders.

Suggested Citation

Villalonga, Belen and Amit, Raphael H., Kohler Co. (March 7, 2005). HBS Publishing Case No.: 205-034; Courseware No.: 205-707; Teaching Note No.: 205-093, Available at SSRN: https://ssrn.com/abstract=721002

Belen Villalonga (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

40 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Raphael H. Amit

The Wharton School UPENN ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104-6370
United States
215 898 7731 (Phone)

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