[ashir]

Hello Trephena,

Thank you for clearing all that out for me. I will try and focus on the synergistic benefits that were expected, what is generated so far and what can be achieved.

One last thing I wanted to ask was that all the information flow is going to be in part 3, right? And that I need to reference the information gathered (facts and numbers) from the online articles, annual reports and any other sources that I have used?

Thank you for all your help once again, I have achieved better clarity than I had at any stage throughout the process of RAP. 😀

Kind regards,
Ashir

[ashir]

Hi Trephena,

Thank you so much for your prompt reply! Your validation has restored my confidence and I feel that I can complete the project on this topic and hopefully finally obtain the OBU BSc degree.

However, as I have been typing the RAP I have noticed the stress my overall objectives place on the corporate strategy of the acquirer and then I thought if I could have just done a topic involving an analysis of a strategy of a company so I just went through the topic list again and realised that there is such a topic, topic 14. Hence, I am a bit concerned if I am deviating from the original requirement of the topic 19 by any chance?

Another aspect I wanted to gain some insight on, if possible, was the appendices and list of references. They are a part of the same document as the Research Report? If so then do I have to include the excel spreadsheet, with all the formulae intact, at the end of the research report document as an appendix? (which I don’t think I know how to but I ll find out).

Also, the slides of the presentation will be copied from power point to SLS word document?

Therefore, in total I only have to upload two Word documents??

Thank you once again for the feedback, it has honestly helped me a lot, I am very grateful ?

Kind Regards,
Ashir

[ashir]

Hi Trephena,

I hope you are well. I have been trying to make a logical structure of the RAP, however this topic is proving to be more difficult than I expected and to top all that my mentor has been of very little help.

After careful consideration and a bit of more research I have decided to approach the topic a little differently now and would highly appreciate your input. I understand that the ACCA average contributes towards the class of the degree and my average is such that I will only be able to achieve a 2:2 irrespective of the grade I score in the RAP and given the time constraint I feel I will be lucky if I even score a C and pass. Thus, keeping all of that in mind I am trying to keep it as least complicated as possible.

Following is what I plan to do now: I have stated the project objectives followed by the research questions and the approach that I plan to take to answer those questions.
Project objectives & Research Questions

1. Objective: To develop an understanding of the drivers that led to the acquisition of LinkedIn by Microsoft.

1.a. What is Microsoft’s corporate strategy how does LinkedIn fit into Microsoft’s strategic business?
This question will be answered by analysing Microsoft’s corporate strategy to understand what it was 3 years ago and how it has evolved over time. Thus, developing an understanding of how LinkedIn fit into the strategy.
– **[ I want to use business model, but don’t know which would suit the best, to cover the above approach to answer the question. If you could please help. ]**

1.b. why did LinkedIn agree to the acquisition?
This question can be answered by performing a pre-acq SWOT analysis of LinkedIn’s business position, which would provide with reasons as to how MSFT has the capabilities to be able to minimise the threats and overcome weaknesses of LKND and help it build on its strengths and realise the opportunities.

2. Objective: To determine whether the acquisition has strengthened the overall business and strategic position of Microsoft (MSFT) and set it on the path to realise its Corporate strategy.
2.a. How much have LinkedIn’s business operations grown and what contributions have been made to Microsoft as a result?
This will be answered by analysing the growth in the business operations of LinkedIn comparing pre and post acquisition position
– User growth? Monthly active users? etc
– Financial Analysis of revenue, cost and profit per segment on quarterly basis hence identifying trends: segments [Talent solutions, Marketing solutions & Premium subscription (including sales navigator- *this compliments CRM)]
– See if there has been growth in these segments, if so how has it been achieved? By minimising threats and maximised opportunity.
– projecting future growth in these variables, along with operational synergies that could be generated to improve these variables.

2.b. what are impacts on Microsoft’s of this acquisition deal?
This question will be answered by evaluating the impact of the deal on msft [(financial and non-financial) comparing with the pre acq positions] and the returns made on investment so far.
– financed by debt – gearing and interest cover ratios [ comparison with previous year and industry avg] , Dividend payments ( if more cash is needed to pay interest then less is available for dividends)
– Share price of the msft? EPS
– CASHFLOWS situation. Lknd and msft
– the acquisition has increased MSFT Market capitalisation
– Analysis of asset turnover, return on investment (ROI) on investment of ($26bn paid for acq)
– sustainable competitive advantage in relation to ‘dynamics CRM and office 365’ – (as the data acquired from LKND is unique) analyse the growth in CRM market share of msft since acq.
– Stakeholder situation can be analysed (particularly in the light of the acquisition) by applying Mendlow’s Matrix.

The results from 2.a and 2.b can be consolidated to reach a conclusion to satisfy objective 2. Thus also providing recommendations on the basis of the findings as to what course of action can be taken by msft to realise the strategic objective (found in 1.a) behind the acqiuistion of Lknd.

I have excluded the WACC, as I could not come up with suitable analysis on the basis of that calculation, other than company’s or target’s valuation, which was making things complicated. I have also excluded the tax implications of LKND operational losses as I am not entirely aware of the US tax laws to be able to calculate the figures.

If I can pursue the topic further in order achieve a pass by excluding some of the above information and add something else instead or rearranging/restructuring the information in any way or optimise the use of the business models (as i only passed p3 on the dot- 50%) please do state as I still have to type the whole RAP and have only got 10 days to go. However, I do have most of the info mentioned and have an idea of providing sensible commentary and analysis as well as no commitments till deadline.

I can totally understand if asking for a detailed feedback on the above would be too much to ask but you are the only source of validation left at this point and I am sure whatever you contribute can be relied upon. I would very much appreciate your valuable insight towards securing a pass. Please help me out with what you can i will start the typing process from tomorrow hopefully.

Thank you for reading the whole mess and for your input in advance.

Kind Regards,
Ashir

[ashir]

Hi Trephena,

Thank you for your reply.

My RAP is based on the Acquisition of LinkedIn by Microsoft, with Microsoft being the focus of the project. I have the availability of Microsoft’s 2017 Annual report and Financial statements for post-acq period. I have been working on developing the framework for the project and after some research this is what I have come up with.

Overall framework is as follows:

I am going to analyse the key factors/ drivers that led to the acquisition by using PESTLE or ‘forcefield analysis’ as my business models.

Further I am going to analyse the key financial implications (short and long term) on Microsoft as a result of this acquisition by using the following methods:

1. Ratio analysis;
• LinkedIn’s gross profit margins and asset turnover (for revenue analysis) figures (comparing the pre and post acq figures) and as a result what it means and has meant for Microsoft
• Microsoft’s gearing ratio- as debt finance has been used for the acq hence this ratio has gone up. Again what it means for Microsoft
• Share price (EPS) variations of both the companies, pre and post acq. Impacts on Investor confidence and later for Microsoft.

2. Microsoft’s WACC calculation. Analysis of pre and post acq. How has the deal benefited M’s financial position and what are the long term consequences.

3. Tax Implications:
• Tax savings for Microsoft as a result of using debt finance, as the interest payments are tax deductible- quantifying the value to attain future tax savings
• Microsoft can set off L’s Operational losses against future profits- quantifying the value by projecting future revenues and costs. What impact will that have on the tax rates and effective tax rates that Microsoft pays in corporation tax.

And as for operational consequences:
1. Business operational synergies-
• LinkedIn data has detailed information in relation to education, employment history and who do they know.
• analysis of LinkedIn’s growth in the number of users and how Microsoft is having and can have an advantage.

2. Microsoft’s marketing strategy- M plans to use L to target the professionals and executives in the market to prop up office 365

3. Competitiveness- salesforce (also offers CRM) , aligning LinkedIn database with’Microsoft’s Dynamics CRM’ to prop up the revenue from Dynamics by targeting the executives

4. Cultural analysis- future potential clashes and reasoning for it.
I am not sure what else I could take into account for operational consequences, however, I do want to add to it.

I want to do a SWOT analysis of the acquisition deal. I am planning to this by pulling threads from financial results into the analysis along with highlighting the operational consequences.

I would highly appreciate if you could take some time out to review and let me know if I am on the track. I have read the Analysis and Evaluation articles and they have been helpful in the preparation so far however, i am not sure if the above would constitute as any original analysis.

Thank you.

Regards,
Ashir

[ashir]

any help would be much appreciated.

Many thanks
Ashir

[ashir]

Hi,

I am ACCA affiliate having completed all 14 examinations and now I have chosen to do topic 19 for my RAP. I have to say that i have found quite useful information on this forum but i would like some further help if i am to pursue this topic further.

I am aware that a natural way to tackle this topic would be to by analysing pre and post acq position of the acquirer, however, i have chosen an acquisition that was finalised in December last year therefore i am only left with 10-11 months post acq period.

Can i set the objectives such that this post acq period is not a problem?

[Author]

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