Merger and acquisition management PDF

Running head: MERGER AND ACQUISITION MANAGEMENT 1
Merger and Acquisition Management
Student’s Name
Institutional Affiliation

MERGER AND ACQUISITION MANAGEMENT 2
Merger and Acquisition Management
Executive Summary
The company is faced with various strategic issues at hand that would change its
operations. In this case, the company is confronted with maintenance of stable financial
prospects due to the increasing capital expenditures after the proposed acquisition and merger by
the rival companies. Essentially, mergers and acquisition are strategies that are applied by many
companies with the intention of enhancing market dominance and increasing the cash flow.
However, the capital expenditure associated with such acquisitions is huge, which depends on
the competitiveness of the rival company, its asset base, and the customer base. It should be
noted that the company has expressed the intention of being acquired by major competitors and
another smaller firm that has a significant market share in the wearable business. Upon the
approval by the CIO, the company will be bought or will merge with one sister companies
depending on the benefits acquired. Nonetheless, such a strategic issue needs careful planning
and proper forecasting due to the severity of the resource allocation and benefits. Despite the
prospects that the firm is set to improve the cash flow significantly, there is a threat that the firm
may suffer financially due to the long time taken to breakeven its operations in the acquired
entities. Further, the need to scrutinize the decision is attributed to the fact that the firm’s capital
expenditure against the revenue may rise significantly.
Achievability Chart

MERGER AND ACQUISITION MANAGEMENT 3
As demonstrated by the figure above, the company’s capital expenditure against the
revenue should dictate the move towards the merge and acquisition process (P. M. B. O. K.,
2008). However, with the implementation of the right strategy issue of being acquired the sister
companies as well as the competitors, the capital expenditure will significantly drop, an aspect
that will impact positively the earnings per share of the company. If the acquisition is to be
effected using discontinuing the product line, the stakeholders might be compelled to forfeit the
dividends because the profits will be in the hands of the third part affecting the reputation of the
business (Cartwright & Cooper, 2012). Therefore, when making the strategic decision on the
weighty issue, the firm has to make a cost benefit analysis to make an appropriate decision. On a
positive note, the acquisition will see the firm gain market dominance Selling the product line to
a one of the industry giants that is interested in growing its market share in the wearable’s
market. This move will translate to increased customer base, increase the cash flow, enhance its