Guidelines
Overview
Organizations wishing to expand through a merger or acquisition must consider several factors to determine the most appropriate strategies for increasing their value. These strategies will vary depending on the company being targeted, the organization looking to expand, and the impacts that result from a merger or acquisition.
Preliminary research of the organization and target companies is warranted for determining the most beneficial deal structure. Your goal in this assessment is to deliver a merger and acquisition recommendation report that proposes expansion strategies between the organization you are associated with and a target company.
Your report will need to recommend either a merger, acquisition, or neither based on the research and analysis you perform. The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These
milestones will be submitted in Modules Three, Five, and Seven. The final product will be submitted in
Module Nine.
In this assignment, you will demonstrate your mastery of the following course outcomes:
Analyze the history and structure of organizations for initiating a well-informed merger and acquisition vetting process
Assess the value of organizations for informing strategic merger and acquisition decisions
Analyze the financial impacts of mergers and acquisitions on an organization for determining their effect on firm value
Determine the potential risks of mergers and acquisitions for informing corporate decisions that mitigate negative impacts on firm value
Recommend appropriate strategies for effectively meeting the objectives of an organization
Prompt
For this assessment, you will create a merger and acquisition recommendation report that suggests how your organization should proceed through an expansion. In addition, your report will need to recommend either a merger, acquisition, or neither based on the research and analysis you perform. You will
choose one company from the list of bidding companies for Section I; then you will choose one of the corresponding targets for Sections II and III.
Bidding Company Objective Target
Alphabet (Google) Growth PayPal,
Twitter,
Pandora,
GoPro
Kroger Diversification Whole Foods,
Ahold Delhaize, Weis Markets,
Sprouts Farmers
Market Inc.
Allergan Operational synergy (economies of scale) Bristol-Myers Squibb,
Biogen, Valeant Pharmaceutical,
Acadia
Pharmaceuticals
Specifically, the following critical elements must be addressed:
I. Introduction: In this section, you will conduct preliminary research of your organization, discuss their objectives to expand, and explain why the organization is in the position to do so.
A. Describe the background of your organization. Include information about the industry in which they are associated, products and services they provide, and major competitors, using specific examples.
B. Explain how your organization is meeting the provided objective and support your explanation using your preliminary research of your organization.
C. Explain why your organization is in a position to expand, and support your explanation using your preliminary research of your organization.
D. Explain why your organization is not currently a possible target of being taken over, and support your explanation using your preliminary research of your organization.
II. Target Company Analysis: In this section, you will conduct research to inform the most appropriate target company selection that meets your organization’s objectives.
A. Identify a target company that you wish to pursue, and explain how it could meet the provided objectives.
B. Explain why the target company that you selected is the most beneficial to your organization, and briefly describe why this selection was the most appropriate compared to the other target companies.
C. Describe the background of the target company. Include information about the industry in which they are associated, products and services they provide, and major competitors, using specific examples.
D. Describe the target company’s current management structure by briefly explaining the background of its senior management team. Consider the president, vice president, senior vice president, chief executive officer, and chief financial officer of the company.
E. Assess the performance of your selected target and describe how this compares to previously identified competitors in the same industry.
F. Assess the last five years of the target company’s financial history for determining its firm value.
III. Financial Impacts: In this section, you will explain the potential impacts of merging with or acquiring the target company. You will consider capital structure and cost of capital when formulating a deal structure.
A. Explain how the target company will bring firm value to your organization by providing specific examples of economies of scale, cost reductions, or increase in revenues.
B. Explain the negative financial impacts that mergers and acquisitions could have on your organization. Support you explanation using examples related to your organization’s objectives.
C. Determine if your organization will finance a deal through the use of cash, stock, or debt. Explain how your selection is most appropriate for mitigating the financial impacts mentioned previously.
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D. Based on the above deal structure, discuss additional risks to your organization and explain how this deal structure will reduce their impact on firm value. Consider political, social, taxation, HR, or cultural risks.
IV. Recommendations: In this section, you will recommend how the company should proceed through either a merger, acquisition, or neither, and support this using your research and analysis as specific examples.
You will need to consider the risk assessments you have conducted when supporting your recommendation.
A. Recommend one of the following approaches for your organization, and justify why this is the most appropriate strategy:
1. Merge with the target company.
2. Acquire the target company.
3. Do not merge with or acquire the target company at this time.
B. Explain the risks associated with your recommendation above and support how this selection best mitigates these risks to your organization.
C. Based on all previous decisions, explain how this deal structure will bring value to your organization.
Milestones
