Question

Due to a sudden downturn in the California economy, the State of California decides it needs to lighten its load and also raise some cash by selling off some of its assets. It has decided that “education is overrated” (and that people can just learn anything through youtube anyway) and is considering a secret plan to sell CSUSM. Yep, the whole shebang is on sale as a package – the school, name & brand, students, buildings, land, students, team sports, even that cougar mascot (whatever its name is). As a business major who has taken finance, the Governor of California (“da Guv”) has hired you to consider and report back on how much it could get for the sale, and the pros and cons of the financial factors affecting the possible priceOne urgent factor, Pepperdine Univ has come with a “take it or leave it” offer that it is flexible to possibly may more than others, but it would need to stretch out the payments over 7 years. Da Guv wants to know is that offer worth considering at all? What factors would affect it? Should da Guv make a counteroffer that would improve the total return for the sale?

Answer 1

California State University San Marcos,CSUSM is a public comprehensive university in San Marcos, California, United States, It was founded in 1989. It is one of the 23 campuses of the California State University system.San Marcos is a suburban city in the North County area of San Diego County.

In the present case the economy of California is dropped due various reasons. But due to the major drop in economy state of California has decided to sell of CSUSM.

Here they are selling end to end to the third party or any body else for that matter to take over and bring on some money into the system. But will this be a wise plan to do to sell off every thing and clean our hands.

But doing this we will lose every thing out of our hands, though we get money into our system we will lose our assets which provides recurring income for our treasury. Hence before selling we need to conduct the valuation of the assets. Suppose if we are getting a net income of atleatst 15% FA to TO ratio then it looks good if we can give the university on outsourcing basis to the third party and need to receive some revenue share out of it.

This will help state of California, to keep the Assets on one side and also we will be getting the regular revenue over and above our net income without incurring any expenses.

This strategy would really work, because selling of the assets always lose the assets though we get the price for it. But without leaving the hold on asset if we can get a regular revenue and that too without incurring much expenses as we are incurring now is a great piece of plan.

I will suggest before selling property they should consider of outsourcing the part of the work to third party and plan for a recurring income from it retaining the property with them. In long term the property remains with them and also the income will be enhanced.