Summary of Cavendish Cove Cottages
Sherry Noonan a final year student of University of Prince Edward Island is an interested buyer
of “cavendish cove cottages”, a cottage rental and hospitality business located in the Cavendish
area of Prince Edward Island. Just like any other potential business owner, Sherry needs
clarifications and guidance to ensure she is making the right decisions by purchasing this
business. In search of guidance, she decided to also seek the professional knowledge of Mr.
Heaney one of her business professors.
The Cavendish cove cottages has 19 rental cottages in total, which consisted of 1-3 bedrooms
type cottages. In the process of making the decision to buy this business, Sherry visited the
cottage and met with the owners Fran and Ted Baker who have owned the business since the
late 1950s. Sherry examined the units of the cottage as well as examined the recent financial
statements of the business. After examining the cottages and past financial analysis. The
owners asked for $800,000 as buying price from Sherry. Although, the buying price sounded
fair, and Sherry’s professor assured her it was a fair price for the business, Sherry couldn’t
convince herself that $800,000 is a fair price for the cottages, and also, she wasn’t sure how to
calculate a fair price for this business.
Sherry considered all the information she had gathered from the owners and started working
on making an offer for Cavendish Cove Cottages. Being a person that has worked in multiple
roles in the hospitality industry herself under her parents’ businesses, she had an idea of how
to run the operations of this business. Still, sherry asked herself multiple questions like; was this
business worth buying? Was the $800,000 asking price a fair price? How would she come up
with the money to buy the business? Sherry’s parents offered to help out financially by
investing in the business, also sherry explored her option of borrowing from the bank and what
it would cost her and her business in the long run. Although the present owners of the
Cavendish Cove cottages were a lovely couple, Sherry wanted the purchasing transaction to be
fair to both parties, so she is still stuck with figuring out if purchasing the Cavendish Cove
Cottages for $800,000 was a fair price for the value of the cottage. While searching for the
answer to this question, Sherry planned to take advantage of the free expert pieces of advice
offered by Mr. Heaney.