Since there are no firms that currently specialize in serving this industry, there is plenty of room for growth but little potential for a buyout by a larger firm. Eventually, a public offering or leveraged buyout can be made when investors want liquidity or the firm needs greater capital access. Valuation of the firm at that point will be based on a fair outside appraisal. At this point, the investment value will have increased between 2 and 11 times in the eyes of the investors based on our sensitivity analysis. The most important component of the financial projections is the sales forecast.
Sales drive our financial results.
Our financials are based on our expected market size, including the entry of competition in 1995. It is clear that expected sales will be well above break-even levels. This is due to the low capital investment manufacturing strategy and the resulting low fixed costs we have employed. Cash Management Independence Marine will be a cash machine. Because this is the first year of outside investment participation, investors will see red ink only in the first few months of 1994.