In November 1994, a private equity fund is considering acquiring a controlling interest in the common stock of a small, rapidly growing publisher of humorous literature (both print and audio). In the process, the company is to be recapitalized substantially with debt and preferred stock, making this a highly leveraged transaction. The task for the student is to value the company and evaluate the attractiveness of the transaction from the standpoints of various participants. The case has three objectives: (1) to exercise students' valuation skills with respect to assets, debt, preferred stock, options, and equity; (2) to explore issues in transaction design as they affect the distribution of value; and (3) to consider the possible sources of wealth creation.