Juno Manufacturing, Inc.: Verify Those Asset Figures

Abstract

The vice president of business development for the Better Living Spaces Company is excited about the prospects of his first acquisition, Juno Manufacturing, Inc., (JMI). He decides it would be prudent to verify that the reported assets on JMI's balance sheets are legitimate. Students will learn the paths he decides to pursue to gain firsthand knowledge of JMI's assets. Excerpt UVA-C-2325 Aug. 11, 2011 JUNO MANUFACTURING, INC.: VERIFY THOSE ASSET FIGURES Halsey Holt, the newly appointed vice president of business development for Better Living Spaces, Inc. (BLSI), was excited about the prospects of his first acquisition—Juno Manufacturing, Inc. (JMI). JMI was a growing, $ 20 million start-up company that had found a real niche in the crowded home improvement products market. Prior to the acquisition and before progressing any further, however, Holt had received permission from the founder of JMI to take whatever steps he deemed prudent to verify that the reported assets on JMI's balance sheets were legitimate. Holt zeroed in on the cash, accounts receivable, inventory and property, and plant and equipment (PP&E) accounts for scrutiny. With more enthusiasm than he thought he would have, he began thinking about ways to acquire the assurance he sought. He did not want to rely on the most recent audit of JMI because it was about eight months old, it had been performed by an audit firm with which he was not familiar, and he wanted firsthand knowledge of JMI's assets. Holt also was intrigued by the prospect of explaining the paths he wanted to pursue and his rationale to the junior colleague who would be assisting him. Company Backgrounds BLSI was a 50-year-old, family-owned conglomerate with headquarters located in a rural area of the southern United States. The company had grown into a $ 1.2 billion business primarily through an ongoing string of savvy, niche-oriented acquisitions that had served to make it a leading wholesaler of all sorts of home improvement products. Those products ranged from imported ceramic tiles to state-of-the-art security systems to decorative moldings and high-quality, avant-garde paints. Of course, the company also wholesaled some basic home improvement products such as prefinished wood flooring, cabinets, plumbing fixtures, and contemporary composite decking materials. . . .