Kohler Company

Introduction

Kohler Company was faced with a very tough decision of whether or not to settle

outside of court or go to court to settle with the dissenting shareholders. We will take

you through the history of the company and why they recapitalized. Also, we will touch

on some of the risks of going to trial to have the courts set a price. We have also broken

down the numbers and found many different prices found by using the dividend growth

model and the multiples approach. We will also show how different outcomes will affect

Kohler’s retained earnings and cash standing. In the end, we believe we have chosen the

best possible price to make everyone in the case happy without much sacrifice from

either side and without having to go to court.

History & Privacy Issue

By creating a hog trough John Michael Kohler established one of the most

profound plumbing companies in the world. In addition to the continual development

and production of plumbing supplies Kohler also hit many other markets since its

formation in 1873. The company’s private dedication to excellence has allowed them

expand and seek control of these other industries. Some of these include furniture,

engines, generators, rental services, and most recently the elegant golfing resort

destinations which gives travelers a sense of privacy. Privacy happens to be one of

Kohler’s most important values of which their success can be partially credited to it. In a

publicly held firm, the company’s ownership is held and controlled by outsiders who had

in some way bought into the firm as an investment, but in Kohler’s case being private

means something totally different.

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Since the company’s development and upcoming ownership has generally stayed

within the family and maintained a completely private state of control. This means both

family members and employees are distributed the ownership of the firm though shares.

Forbes claims that Kohler’s success can be credited towards going and staying private

because