1) Proposal – Perform the industry analysis. Prepare a brief, written proposal to the executive management team, explaining your potential choice (or choices) for acquisition: Overview of potential acquisition and why it makes sense to the parent. This is the who, what, where, why, when, and potentially how. You will consider many factors, including your industry as a whole and the current and expected economic climate.
2) Executive Report – Part A: Internal Management – Prepare an executive level report related to the target acquisition company’s financial and operational strengths and weaknesses that addresses the acquiring company’s internal management team. Key words: synergistic, opportunistic, and financial. Report on what your research into the target company’s current financial and operating status is (this should include a financial statement review and examination of the footnotes in the annual report) and report it your executive team and any key internal personnel. There should also be some consideration into how what is discovered makes the target a good (or bad) acquisition at this time.
3) Executive Report – Part B: External Stakeholders – Prepare an executive level report related to the target acquisition company’s financial and operational strengths and weaknesses that addresses the acquiring company’s external stakeholders. Key words: synergistic, opportunistic, and financial. This should reflect much of the information gathered in for the internal management report, but it needs to be tailored to fit the parent company’s external stakeholders.
4) Risk Analysis – Evaluate risk factors for target acquisition company.
Evaluate risk factors present in the parent (acquiring) company.
Prepare a report on this analysis. This report should complement the previous documents from Weeks 2 and 3 and delve into areas of risk exposure for the parent in making the acquisition. The key is to identify the major risk exposures and how they can be mitigated.
5) Summary of Performance Tests with Exhibits – Prepare a summary of performance tests and analysis of the target acquisition.
Perform the following tests to help determine what the acquiring company will pay for the acquisition—this is a range. The focus of this deliverable is the target acquisition company.
Calculate the value of the firm’s operations.
Calculate weighted average cost of capital (target company).
Determine the firm’s intrinsic value.
Calculate the firm’s market value.
Determine the firm’s book value.
Determine what the parent company will pay for the target acquisition company. Be sure to include how the target company provides synergies and opportunities to the parent company.
6) Summary of Financial Analysis with Exhibits – Perform tests to help determine how the acquiring company will pay for the acquisition. The focus of this deliverable is the acquiring company.
Identify and evaluate sources of debt financing.
Identify and evaluate sources of equity financing.
Compute cost of debt financing.
Compute cost of equity financing.
Determine optimal target capital structure.
Calculate weighted average cost of capital (parent company).
Determine how the parent company will pay for the target acquisition company.
Develop a strategic growth plan and explain how this acquisition supports the plan.
7) Executive Report – Prepare a report for executive management describing how the acquisition can be financed. Use the information from deliverables 5 and 6.
