Problem 1. In your words, briefly describe a synergy. Why are synergies so important-
Problem 2. Why do such a large portion of mergers and acquisitions fail to meet the pre-acquisition targets.
Problem 3. Explain how lease rates are calculated (by the lessor) 150-200 words
Problem 4. Choose 1 of the following Value drivers and briefly discuss why it is important in increasing market value :
VALUE DRIVERS VALUE-ENHANCING STRATEGIES
Sales growth for years 1-3
- Implement a new promotional campaign to promote exciting or new products
- Form a distributional alliance to enter a new market
- Invest in R&D to create new products
- Acquire a competitor firm
Operating profit margin
- Initiate cost-control programs to reduce operating and administrative expenses
- Invest in a promotional campaign aimed at improving the brand image of your products or services in an effort to support premium pricing policies
Net working capital-to-sales ratio
- Initiate inventory control policies designed to reduce the time that inventory is held before sale
- Implement a program of credit analysis and control designed to either decrease the time customers take to pay for their purchases or to incorporate penalties for late payment
- Negotiate more lenient credit terms from the firm's suppliers
Property, plant, and equipment-to-sales ratio - Consider outsourcing of production to strategic partners who might be more efficient in
their operations in an effort to reduce the firm's need for plant and equipment
- Implement stringent controls over the acquisition of new plant and equipment to assure that all purchases are economically viable
- Improve maintenance of existing plant and equipment to improve up time, which reduces the need for additional plant and equipment
Cost of capital
- Review the firm's financial policies to assure that financing is being obtained from the lowest-cost sources
- Approach large institutional investors in an effort to develop direct sources of financing for the firm's new capital needs, thus bypassing the significant costs associated with using the public capital markets