Case Study 35 Deluxe Corporation Groton

Summary Deluxe Corporation is the dominant player in check-printing industry. In the past, its sales increased at a compound annual rate of 12% and occupied 49% market share in US. However, new forms of payments encroached on the demand of check-printing industry. The demand for printing check falls at 1% to 3% annually. The core business of Deluxe faces a big challenge. In the late summer, Singh, the retained by Deluxe’s board of directors was designated to submit a plan for the new round of debt issuing. It’s certain that someday in the future the company may struggle to survive. In order to deal with bad situation in the future, Deluxe must maintain financial flexibility and lower its cost of capital by changing into appropriate capital structure. There are three alternatives in this case. They are issuing bond at AA, A and BBB rating. And in each situation, we get the lowest WACC. In the implementation, we decide to issue bonds at rating BBB. Problem Statement Deluxe Corporation will face a big challenge for its core business which means that the company would struggle to survive in the future. There is a new round of issuing debt at hand which may help Deluxe to relieve some pressure for the future. This new debt could help increase financial flexibility and change capital structure which produces lowest cost of capital. So the key issue here is : what’s the best debt policy for Deluxe corporation?

Company Description:

Small Business Services

Company Info:

At Deluxe Corporation, we are all about community and what brings people together, and we believe that small businesses are not only the heart of our communities, they’re the future of our economy.They’re the heroes who are living their passion, every hour of every day, despite the challenges they face. For more than 100 years, Deluxe has worked closely with small business. And in doing so, we’ve learned a lot about what they need to reach their goals. We’re here to support them and to do what it takes to meet their needs on their terms. Our Small Business Revolution is a movement Deluxe created to bring even more attention and support to these important and inspiring entrepreneurs, and to breathe life back into the communities we love, one small business at a time. You can be part of this revolution.

Our Mission
To help small businesses reach their goals by providing high-quality tools and services, enabling them to connect with new customers, build loyalty and do business online.

Our Vision
We will be the trusted partner for small businesses by providing great products and an effortless customer experience. Our products and services will be affordable, offering more value as our customers’ businesses and needs grow

Deluxe is changing, evolving and growing. It is a company built on ideas and a clear vision of making those ideas into real and innovative solutions for our customers. As a part of that transformation, Deluxe aggressively is recruiting people who have ideas of their own—people who can embrace change, are excited about developing new solutions, and want to make a real impact—leading from the front and being dedicated to making a difference.

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