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Personally, I found this to be the easiest paper to attempt, but now im scared this might mean I did it all wrong and got the wrong impression
First attempt, interesting paper to do rather than the Auditing one I did previously.
Liked the acquisition question and source of finance to use, recommended not to take it on.Really? I thought it was a great option for them to take, i just mentioned that they should negotiate the price a bit better but the digital potential outweighed most of the risks i noticed
Agreed – simply not enough time to properly analyze and think. This can be a huge difference in a comfortable pass.
the 20% premium put me off, I was being a bit too cautious maybe?
Plus mentioned Merceh has a lack of experience in acquisitions.Same. I did not recommend the acquisition. I justified as overpayment, liquidity strain, possible cultural mismatch, talent loss if print staff leaves, shareholder backlash as the company may be overvalued, risk as the company doesn’t have an experience in owning a digital platform therefore risk of data breach, cyber security etc. I recommended looking for different option such as alliance or sth till Merceh doesn’t fully develop skills to properly manage a platform like that. I presented some benefits too like full control, possible sources of revenue from advertisers etc. I hope it makes sense 😀
I forgot to add during the exam but came to me later on that the company directors ( since they wanted cash for their shares) might have overvalued company to get more money than the company was worth therefore valuation would have been necessary before the acquisition.
I got a different set of questions from y’all. I got Q3 with risks of content production and bribery. I hated Q3, maybe because I ran out of stamina, ideas, time. Could only make 6 points in 3b.
Also, I repeatedly mentioned impacts of loss of readers, reputation, revenues in the whole Q3. Felt very tired at Q3 and demotivated. might get very low marks in Q3. I also spent more time on Q2 because I still think that Q2 is the chance to maximise my marks (well, I did overrun on Q2 and I know the risk of failling because time management). I could only hope that Q2 contributes more marks to passing though.
FYI, Q2 is about an acquisition of a foreign magazine publisher (I forgot to mention forex risks lol) and digital capabilities and benefits to Merceh.
I also said that they should go ahead with the Acquisition. Felt that it will help Merceh a lot wit their digital transformation. Benefits outweighed cons. It was also mentioned on the pre seen that their IT system was the same for six years, so they really need an upgrade in their digital platform. I said that they should opt for the loan, this is because the gearing will go up but in the long-term it will go back down if the integration is successful.
Hi
what was the hardest question is about?
and what are the other qusetions are about?Unfortunately may exam of SBL was cancelled by The ACCA for the security issues.
Thanks.I chose equity. I justified as something like from a risk management perspective: Loan finance increases financial risk beyond target. Asset sale weakens financial safety and possibly strategic capability. Equity protects financial stability but dilutes control. Given Merceh’s exposure to industry disruption and the uncertainty of digital returns, financial resilience is critical.
Therefore, equity appears to be the most strategically aligned option, as it:
Maintains gearing discipline preserves liquidity, Shares risk with investors
And Supports long-term transformation
From a risk management perspective:
Loan finance increases financial risk beyond target. Asset sale weakens financial safety and possibly strategic capability.
Equity protects financial stability but dilutes control. Given Merceh’s exposure to industry disruption and the uncertainty of digital returns, financial resilience is critical.
Therefore, equity appears to be the most strategically aligned option, as it:
Maintains gearing discipline preserves liquidity, shares risk with investors and Supports long-term transformation. In this context, increasing debt above target appears inconsistent with risk appetite, and exhausting retained earnings reduces flexibility. Equity financing, while dilutive, may best support long-term stability.
I feel like if the justification was credible it should be fine.
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