Acquisition Report of OF Y LIMITED

Acquisition Report of OF Y LIMITED 

Student Name:

University:

Subject:

Instructor:

September 19, 2013

Table of Contents

Content…………………………………………………………………………………Page

• Letter of Transmittal…………………………………………………………3
• Executive Summary…………………………………………………………4
• Introduction…………………………………………………………………..4
• Analysis………………………………………………………………………5
• Recommendations…………………………………………………………….8
• Conclusion……………………………………………………………………8
• References……………………………………………………………………9

Letter of Transmittal

To: THE MANAGING DIRECTOR, X LIMITED

From: “PUT YOUR NAMES”

Ref: 45, INDIA, BOMBAY

RE: ACQUISITION OF Y LIMITED  

A per your request to prepare a report detailing advice regarding the potential acquisition of Y limited, I have assessed the fundamental information concerning the subject matter and the report is as outlined above.

The main aim of this analysis is to provide the potential returns and risks of this impending acquisition. In doing so, the report has narrowed down its findings to country-specific risks and returns as it applies to the IT industry.

It was a wonderful experience working on this project, and hope to continue working with you in your future projects.

Thanking you,

“YOUR NAME”

1. Executive Summary

Expanding into new global markets through acquisition is much the same as venturing into a new enterprise. Most multinational companies often fail to succeed in international markets because of poor or lack of due diligence of the host-nation’s culture, as well as country specific aspects such as national politics, societal attitudes, technological differences and economic barriers. Companies need to be vigilant to factors such as political landscapes, for instance terrorism and civil wars to they make acquisition decisions because such elements can ultimately result in enlarged costs of conducting business operations comprising hiring of security personnel to secure your premise or buying business insurance to protect your business against possible damages.

Potential investors need also to consider intangible assets while determining the value to the company to be acquired. Intangible assets entail, the level of the management team (whether strong or not, the reputation of the company, the growth trends of the IT industry, whether the company has skilled workforce, the customer loyalty and concentration, the trade secrets of the company, the quality of reporting its financials since Y is a limited company and the geographical location of the company. Therefore, in establishing the real value of Y limited, X limited should peg the value of Y limited on those unique strategic advantages that only Y limited can achieve.

2. Introduction

Several multinational IT corporations and not just Indian firms are increasingly venturing into the global markets because they have noted that success cannot be achieved only within their domestic markets. For Indian IT Company, venturing into international markets does not merely mean that there are opportunities outside Indian geographical segments that they can tap, but it also means the opposite (i.e. other multinational IT companies are also India as a potential investment location). For companies with great vision and mission such as X limited, they aspire to grow and expand both in the domestic and global markets. Hence, international venture is being sought by X limited mainly to acquire economies of scale and to reduce the risk of the reliance on the saturated local and geographical market segments with regard to their global rivals.

3. Analysis of the potential returns and risks

Economic barriers: International concerns causing business failures include hidden costs for instance internal regulation and bureaucracy. The monetary and fiscal policies in Europe can affect the monetary exchanges in France that play a significant role regarding the operational expenses such as paying of wages and purchasing of materials. France has an open tax system and there are no hidden fees which can result in the increased cost of running business.

Societal factors: The perception of the public is a significant component of a company’s global reputation. Therefore, looking at the country’s societal beliefs and issues are important for the success of X limited. According to (Sherman, 2007 pg, 16) a survey carried out by GlobalScan, 8 out of ten people in France belief that companies should be partly responsible for minimizing human abuses in states where they conduct business.  Societal elements comprise a company’s impact on the religious beliefs, the environment and local communities. Also, because Indians mostly speak English and their business counterparts and customers in France speak French, Language barrier may affect the company operations and could cause increased costs for hired translators and cultural misunderstanding.

Future Returns:  The value of the business should be determined from the pers.............