Capital Mortgage Insurance Corporation (A) Individual

Assignment

Deliverable Instructions
The instructor will assign your role approximately one week before you are scheduled to conduct
the negotiation. Students will be assigned to one of the following roles:

 Frank Randall and Jim Dolan of CMI

 Elliot Burr, Michael Kupchak, and Thomas Winder of CTS

During the Live Session, the instructor will call upon students to represent Frank Randall and Jim
Dolan of CMI, and Elliot Burr, Michael Kupchak, and Thomas Winder of CTS. Selected students will
negotiate the Capital Mortgage Insurance Deal for 15-20 minutes, starting at the point in Part A of
the case where Randall and Dolan of CMI are about to present their Draft Purchase Letter to the
Executives of CTS.

Once the negotiation has been completed and discussed, the instructor will lead the class in
unfolding the way the negotiation transpired and what the valuable learnings are from this case.

After completing the reading, submit your answers to the following question:

 How well prepared is CMI?

CMI seems well prepared since this will benefit them by making a huge jump start into the
corporate relocation business, and a significant increase in CMI’s mortgage insurance business.
CMI could present research completed on CTS’s operations to gain an advantage. CMI followed
correct negotiation process by first getting into a good position. It is essential for the executives at
CMI not to let their emotions show since it is evident that CTS was eager to sell. CMI employed
strategic moves by doing background research to determining the value CTS would be to CMI in
the acquisition. CMI also collaborated with MetroNet for support, who was already involved with
CTS.

 What should CMI be expecting from CTS?

CTS believes they are worth $6.25 million plus for only 80% stake. This calculation is higher than
CTS net worth since some of the CTS executives have invested more money in the company and
are interested in recovery of their investment. CTS partners need a guarantee that they will
receive some of their investment back and details assuring this plan could be negotiated. The truth
is that CTS is not presently a thriving company. They were only worth approximately $420,000 as
of late 1978. CTS also owes millions of dollars in loans. If CMI acquires CTS, they will buy these
massive loans as well.

Bring a copy of your answer to the Live Session for discussion. Additionally, be ready to discuss
and to role-play a negotiation strategy for Randall and Dolan as they move forward to present their
initial offer to CTS as described in your reading at the end of Part A.