Barbarians at the Gate: RMS Teleinformatics' Acquisition by a Private Equity Fund

RMS Teleinformatics, a technological company in the field of communications, has experimented healty growth from its inception. After some years the need of ever increasing investments and the possibility to access to larger contracts present the need of a higher level of capital for the firm. For this reason a Private Equity Fund is approached. The fund presents the owners with a plan of financing that creates overall value for the firm. The proposed capital inflow will change the size of the firm. The question to be analyzed is who seizes the firm value increase? The present owners? The Private Equity Fund? The case gives an excellent opportunity to understand the interest of both parties and study if they are aligned with the same objective. Firm valuation and investment schedule are topics that can be covered as well.