Wilma and Mary are partners in "Wilmary Books," a highly successful second-hand bookshop business in the inner western suburbs of Melbourne. Wilmary Books leases its premises from a real estate called Sly & Sharp P/L. Meridith is the sole proprietor of "Meridith's Books" a second-hand book shop in the neighbouring shopping centre. Wilmary Books is approximately twice the size in turnover (sales) than Meridith's Books.
When they met at a trade function a month or so ago, all three proprietorsagreed that they should consider merging or amalgamating their businesses as this would give them far greater market presence and economies of scale than they had in their present competitive stature.
Wilma and Mary have decided to get independent advice on the merger proposal and they have retained you to advice them. Meredith is free to obtain her own advice and you are not concerned with what, if any, advice Maridith is getting or from whom.
In any event, all three proprietors are agreed that the key concerns re the merger proposal are as follows:
1) What sort of business structure they should use as the basis of the merged business, and why?
2) How can Meridith retain an interest in the merged business: Note that Meridith's business, while it has great potential, is barely profitable, due to Meridith's lack of knowledge of the second-hand book market. Nonetheless Meridith is insistent on having some role in the merged business, and will not allow the merger to go ahead until that aspect is resolved. Both Wilma and Mary do NOT want Meridith to have any managerial role in the merged business but would consider a non-managerial involvement.
3) What is the underlying problem associated with the lease on the premises of Wilmary Books and how would you resolve it as part of your merger proposal?
4) The assets of Meridith's Books includes $20,000 worth of antique books which were provided by their owner to Meridith and have since been included in the stock of books at Meridith's Books. The owner of the antique books believes he still owns the books and that they were delivered to Meridith's Books 'on approval' for sale on a commission basis. Meredith believes she bought them outright.
Advise Wilma and Mary in respect of each of the above concerns.