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Scherer contemplated divesting itself of Old Lorvic because of
new strategic objectives and considerations with respect to its
business.
In an undated Descriptive Memorandum prepared by Shearson
Lehman, it was noted that "Management feels the loyalty of its
customer base is Lorvic's most significant competitive advantage
in a market dominated by large corporate organizations."
Moreover, the Descriptive Memorandum also recognized that "While
[Old Lorvic] utilizes a dealer network for the majority of sales,
senior management has built strong direct relationships with
[Old] Lorvic's old customers." The Descriptive Memorandum
reported that the management of Old Lorvic projected that
revenues would increase in the short term. In particular,
revenue was projected to be $4.1 million for the taxable year
ended March 31, 1990. This figure was a 12.8-percent increase
from the previous year. For the fiscal year 1992, revenues were
projected to reach $5 million with $2.1 million in operating
income.
Scherer offered to sell Old Lorvic to Richard Nemanick for
approximately $7.5 million. At the same time, Chemical Ventures
Capital Associates (Chemical Ventures), a venture capital
company, in conjunction with John I. Kirtley (Kirtley), and P.
Jeffrey Leck (Leck) received the Descriptive Memorandum regarding
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