Description: Last week this blog featured a story on the sale of Canada’s Mountain Equipment Co-op (MEC) to Kingswood Capital Management. This week comes news that MEC considered another alternative to solve its financial problems: a direct appeal to its close to six million members. But the decision-makers rejected the member bailout model as “impracticable to impossible.”
Date: September 25, 2020
1) If you were a MEC member would you have been willing to support a member-based bailout with some of your own cash? Why?
2) The article notes that a special committee of the board weighed the factors involved in the member bailout option and then decided against it. Do you think the committee made the correct decision? Why or why not?
3) Chapter 2 of Wiley’s Financial Accounting: Tools for Business Decision-Making, contains a section titled “Framework for the Preparation and Presentation of Financial Statements.” Illustration 2.21 summarizes this conceptual framework. What item in Illustration 2.21 seems particularly applicable for the MEC situation?