1. PwC Executive Summary for Greenlight’s Sustainability Solutions
November 18th, 2016
Mission Statement
Over the past month we, associates at PricewaterhouseCoopers, have been working with
a Mississippi based company, Greenlight, in an effort to increase their sustainability efforts. We
are working towards this goal in response to an environmental situation involving Greenlight.
Last month, tires produced by Greenlight were found in protected wetlands along the Mississippi
River. This caused Greenlight to experience major criticism. In response to this situation, there
were two potential solutions that were put into consideration. The first was to research and
develop an environmental initiative internally. This initiative aligns with Greenlight’s business
model, “Built at Greenlight for Greenlight”, which encourages internal development over
acquisitions. The second was to acquire an existing company known as RubberUp. RubberUp is
a privately-held company located in Atlanta, Georgia. RubberUp manufacturers rubber
playground mats out of recycled rubber material and has a strong presence in the market for
sustainable products. Through our analysis of various scenarios and understanding of company
initiatives, we have come to the conclusion that the acquisition would place the company into the
best financial position for future success.
Benefits and Considerations for Acquisition
Greenlight has been against participating in mergers and acquisitions, however, we
believe RubberUp’s business strategy aligns perfectly with Greenlight’s core commitments.
RubberUp’s main competencies are the production of sustainable products and a focus in internal
research, which is very similar to Greenlight’s main commitments. From there, we looked into
the financial feasibility of this acquisition and found that there are a few benefits that we should
take into account for our decision. Those benefits fall under three considerations that we want to
improve. In our analysis, we found that cash and equivalents would be maximized by the
acquisition compared to our decision to internally develop a company. We believe that this is
very important because of the large legal charges we may face in the future. Building off of that,
by maximizing our current ratio, we will be able to have the ability to pay back any obligations
and charges. Our final consideration is the maximization of net income for the upcoming year.
For these reasons, we believe that the best choice of action is to acquire RubberUp because it
will enable us to protect ourselves against legal fees and create the strongest financial stability
going forward. (Data referenced in this section can be found in Figure 2.1.)
Overall Changes on the Balance Sheet Post-Acquisition
With our decision to acquire RubberUp, we have a few changes from 2015 that are
shown on the 2016 Balance Sheet. The most important of those changes are the change in cash
which dropped by $1.49 million. Another very important change that we found is the change in
current ratio, which drops by nearly .23 from 2015’s pre-acquisition ratio. For the rest of these
changes, please refer to the Balance Sheet in Figure 1.1.
Tax and Accounting Considerations Post-Acquisition
There are considerations that have to be made towards tax benefits that Greenlight may
face by acquiring RubberUp. Since Greenlight is incorporated in Delaware, and RubberUp is
based out of Georgia, there will be different corporate tax rates for both states. Also, since we are
acquiring a business that has operations that are sustainable and good for the environment, we

2. will receive tax assets that have not been accounted for yet. From these two tax considerations,
by acquiring RubberUp, we will find a slight decrease in the tax payments for the new operating
income generated after the acquisition. Other considerations involve the accounting process that
occurs before and after making an acquisition. For this reason, Greenlight will have to purchase
RubberUp for more than its book value. Also, there will need to be considerations for acquisition
costs and goodwill. On top of that, before the acquisition is finalized, PwC will also look into
financial information such as how to allocate research and development, depreciation, and capital
expenditures.
Expectations Moving Forward
We at PwC firmly believe that an immediate action is required for this acquisition. We
request that the management of Greenlight contact us within two weeks if they would like to
proceed with the acquisition. PwC would then utilize our expansive lines of service in order to
help assist Greenlight. Once our lines of service have done the initial analysis, the acquisition
will be completed quickly and PwC will remain available to the company for the next six to
twelve months to ensure a fluid transition.
Figure 1.1 Figure 2.1
All numbers in Thousands: 2015 2016
Current Assets:
Cash and Cash Equivalents $7,796 $6,304
Net Receivables $2,439 $2,439
Inventories $1,201 $1,701
Other Current Assets $241 $241
Total Current Assets $11,677 $10,685
Long Term Assets:
Property Plant & Equipment $4,747 $4,747
Goodwill $265 $465
Intangible Assets $112 $1,112
Other long-term assets $824 $824
Total Long Term Assets $5,947 $7,147
TOTAL ASSETS $17,624 $17,832
Current Liabilities:
Total Current Liabilities $4,392 $4,392
Long term Liabilities:
Compensation and benefits $3,657 $3,657
Long term debt $390 $390
Deferred income taxes $2,158 $2,158
Other Long term liabilities $956 $1,956
Total Long term Liabilities $7,162 $8,162
TOTAL LIABILITES $11,554 $12,554
Total Shareholders' equity $6,071 $5,278
TOTAL LIABILITIES AND EQUITY $17,624 $17,832
Basic Balance Sheet
2016
Current
Ratio
Cash
Net
Income
Acquisition 2.43 6,304 1,262
R&D $1850 2.23 5,898 83
R&D $2050 2.20 5,770 (45)
R&D $2250 2.17 5,643 (172)
All in thousands except Current Ratio