Sky Air Case

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Name: Course: Instructor: Institution: Date of Submission: When and why principal-agent relationships exist? As we have uniquely seen in the Sky Air article, it is evident that this company is well off and Samuel Kaplan has worked hard to make it successful. But in addition to this, we decipher that he has the dilemma on whether to sell a portion of his company's stake to Thyestean Ventures. Stacy Simms, the Manager General Partner of Thyestean Ventures sternly, has stated that the corporation will be willing to buy 30% equity stake in Sky Air at not more than $6 million. Moreover, this kind of offer is troubling Kaplan so much because he thinks that his company is even worth more than $20 million at that given stake of 30 percent. He is also at a juncture of figuring out whether he should take the money since he has more pressing issues when it comes to his private life. The main reason as to why I am illustrating this is because Samuel Kaplan scenario earnestly requires an establishment of a principal-agent relationship. Furthermore, it is true to say that Kaplan should have an agent who will be officially involved in the process of setting-up a counter proposal. The principal-agent relationship in this kind of situation will stimulate the negotiations since; the principal being Kaplan and the agent may be an attorney will have an agreement on what they want as a counter offer. Kaplan will not be able to make decisions out of personal needs since the agent will be making professional decisions that will be best for the company. Another reason why a principal-agent relationship is indispensable is for the reason that an agent is specifically trained and

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