PwC Case Study (1)

© 2016 PricewaterhouseCoopers Sustainable Solutions

Sustainable Solutions

Parker Decraene, Alexa Graf, Samuel Isken and Austin Rieck

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© 2016 PricewaterhouseCoopers Sustainable Solutions 2

Purpose: To provide a basis for Greenlight’s decision on acquiring RubberUp or investing in the development of a tire recycling practice.

PwC ServicesAccounting Implications

Balance Sheet Change


Current Situation of Greenlight

Agenda


Company Profile: Greenlight • “At Greenlight, we make tires that keep America

moving.”• “Built at Greenlight for Greenlight” • Greenlight 2030 • Incorporated in Delaware and headquartered in

Mississippi.

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• Greenlight produced tires that were found in protected wetlands along Mississippi River.

• Facing $5 - $10 million in fines and $15 million for restitution.

• Need to put sustainability at the center of your business practices

• Greenlight plans to develop a business to recycle used tire rubber

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Current Concerns


• Two different options moving forward:• Increase Research & Development efforts to

implement this idea

OR• Acquire RubberUp, an existing business that

already has many of the industrial aspects and technology required.

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Possible Responses



• Privately held company based and incorporated in Atlanta, Georgia

• Manufactures rubber-based products from recycled tires.

• Has a strong presence in the market for sustainable and environmentally conscious products.

• Originally served only businesses but has recently expanded to serve consumers.

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Company Profile: RubberUp



Solution to the Problem• Our Considerations

• Current Ratio - Measure of the ability to pay short & long term obligations

• Large cash sums are necessary for potential legal problems

• Maximization of Net Income is important in looking at potential reinvestment in the future

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Decision: Acquire RubberUp to improve your sustainability efforts.


Changes on The Balance Sheet

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• Changes from 2015 to 2016 in the Balance Sheet • Cash decreased

• Inventories increased

• Goodwill increased

Balance Sheet Change

Cash$1.49m

Current Ratio0.23


Corporation Tax By State • Corporation Tax - tax on the income or capital

income of corporations• Tax benefit from acquiring RubberUp due to

lower tax scenario• Lower tax rate in Mississippi

• Sustainable company

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GA6.00%

MS5.00%

DE8.70%

Accounting Implications


Accounting Considerations • Proper accounting procedures for an acquisition

• Goodwill Impairment

• Acquisition Premium (25% Premium)

• Depreciation & Capital Expenditures

• Other considerations• Acquisition charges

• Research & Development to be expensed or capitalized

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Accounting Implications


• PwC’s Services that will assist you in the future:• Financial Due Diligence

• Mergers & Acquisitions

• Tax Exposure

• Valuations

• Strategic Sustainability

How can PwC help

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PwC Services


A Look Ahead for Greenlight • Final recommendation by

PricewaterhouseCoopers• Acquire RubberUp

• Action should be taken immediately• Within two weeks alert the firm if you will be accepting

the proposal and acquiring RubberUp.

• Acquisition will occur immediately and the firm will be present for the next six to twelve months to ensure a successful transition.

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ReferencesPricewaterhouseCoopers, P. (2016). Mergers, acquisitions, dispositions, IPOs. Retrieved November 14,

2016, from http://www.pwc.com/gx/en/services/tax/mergers-and-acquisitions.html

PricewaterhouseCoopers. (2016). Greenlight. Retrieved November 16, 2016, from

http://greenlight.pwc.com/

PricewaterhouseCoopers. (2016). PwC on Sustainability. Retrieved November 14, 2016, from

http://www.pwc.com/us/en/corporate-sustainability-climate-change/pwc-on-sustainability-c-

suite.html

PricewaterhouseCoopers. (2016). PwC's careers site for students. Retrieved November 14, 2016,

from

http://www.pwc.com/us/en/careers/campus/why-pwc/firm-facts.html

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PwC Case Study (1)