Arthur M. Blank Center
for Entrepreneurship
Babson Park, MA Phone: 781-239-4420
02457-0310 Fax: 781-239-4178
Revised 06/09/2011 URL: http://www.babson.edu/entrep
AlberCan Drilling Supply Company (B)
The Reaction
After leaving Mr. Rocquet’s office at First Mountain Bank with a commitment for an additional
$200,000 credit, Ian MacDonald headed back to ADS thinking about what the loan covenants
would mean for his business. On the way, he stopped by the office of an entrepreneurial friend,
Chuck O’Neill, to get his point of view on the matter. After listening to Ian’s summary of his
situation, Chuck commented, “I understand that you are looking at sales of $4.4 million next year
and a tight cash situation. If my memory is correct, two-thirds of your sales are to small drilling
companies and one-third to larger corporations. Will this still be the case next year or is one of
these customer-product lines growing faster than the other?”
Ian responded, “Yes one of them is. The large company share of the business has been growing
faster — and this is good because it is more profitable. These customers want good service and I
have the inventory to provide it. This takes cash so I charge higher margins on the types of
