Capital Mortgage Company Case Analysis

Capital Mortgage Insurance Corporation
Case Study Analysis
Negotiation and Strategy
Oklahoma Wesleyan University
Capital Mortgage Insurance Corporation: Case Analysis
Capital Mortgage Insurance Corporation, hereafter known as CMI, is a wholly owned subsidiary of Northwest Equipment Corporation. CMI was acquired by Northwest when their original parent company filed for Chapter 11 Bankruptcy. Northwest expects Frank Randall, president of CMI, to build the company into a larger diversified financial services company.
Randall hopes to acquire Corporate Transfer Services (CTS) a small relocation services company, as part of his plan for diversification. Currently CMI sells mortgage guaranty insurance policies to residential mortgage lenders throughout the United States. Randall had been following the real estate market for some time and discovered that Merrill Lynch had entered into the relocation industry with substantial profit. This fanned Randall’s desire to move to the relocation industry and diversification. Plans to move forward with the acquisition have gone forward, and informal discussions took place with the principal stockholders of CTS four months previously. A plan for a formal negotiation strategy and a purchase offer are in the development stage. If successful, the acquisition of CTS will be a first for CMI and will help Randall realize his goals for diversification for CMI.
Randall contacted David Osgood, executive director of the Metropolitan Realty Network, a national association of independent real estate brokers. He discovered that they were both attempting to accomplish some of the same goals, and had CMI in common. Both men felt that developing a relationship, or a third-part equity business, between their respective companies could provide major benefits for both organizations (Lewicki, Bruce, & Saunders, 2007) The relationship with David Osgood of MetroNet Brokers could lead to increased sales of CMI’s mortgage...