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Hi @GillianM
Just a quick question and your contribution towards this would much appreciated.
Do still need to have mentor or gives mentor details when re-submitting updated research report (RR)?
I am a bit confused about the requirement regarding this because i have passed SLS in my previous submission.
Thanks.
Hi there,
I am planning on submitting for the November 2018 period and have chosen topic 19. I am around 75% complete on my first draft of the RAP and wanted to show my structure/topics so far and ask if you believe I am covering enough areas. I understand they should match my project objectives, but having some assurance over if I am answering the overall topic would be of great help (for the evaluation/analysis section):
– Economies of scales – pre for both companies and post acq’ (utilising various formed graphs and drawing to conclusions and how the acq’ has helped this)
– Share price reaction of competitors as well as how announcement of acq’ impacted two companies pre/post
-Synergies – describing 3 main synergies as a result and have provide graphs/analysis into how these have/have not been achieved from the acquisition
– Cultural analysis pre acq for both companies and then how the acq has led to a clash of culture and the impacts of this etc (ie: poorer service, inefficiencies)I also plan on adding:
– Competitiveness (how the acq’ of the company has aided the acquires competitiveness
– Profitability of the company pre/post as well as competitors reaction
– Rationale for acquisition and type of integrationFinally, I will ensure to incorporate SWOT/PEST models (I’m thinking SWOT to support rationale for acquisition) and PEST post acq
EDIT: I should note, due to the nature of the companies being so large, I have not been been able to obtain primary information since it would not be of use (sample would not represent any valid support/conclusions), I therefore stated this limitation in my RAP under section 2 and to get around this, instead of just citing sources, I obtained various historic data and statistics, and created my own analysis to support my claims.
Ie: I obtained all the reviews of a company from 2011-2019, broke them down by star rating and period and showed how from the acquisition, that customers reputation of the company has decreased
Essentially, I have used other peoples data (surveys etc) and formed my own analysis and drew additional conclusions to support what I have written. Is this a good work around?
Sorry, can I also say that a drawback is that since the acquisition, the acquired company results are consolidated into the parent, therefore I cannot specifically look into how the acquired company has performed since being acquired.
I was hoping the above points of focus and my analysis would be sufficient to assess this?
I have access to the pre acquisition financials of both and the post acquisition of the acquirer company.
What approach would you recommend in this instance?
Sorry for the bombardment of questions, but any assistance on these matters would really be greatly appreciated 🙂
nathan488 – your approach sounds fine. Although you say you cannot look at the financials post merger because there is obviously only one set of financial statements now, you may be able to examine the trends in the figures in the light of the stated objectives of the acquisition (in fact possibly your section on synergies is already doing this?) So as long as there is evidence of what the acquisition has achieved (for better or worse) and analysis and evaluation of this for you to be able to form judgments then you should be on track.
Primary data is not essential but may be a useful add-on when a student has access to staff in the organisation to add some information on cultural aspects of the acquisition. In larger organisations either media articles and/or analyst reports will offer info on this (as in the case of the shameful takeover of Cadbury by Kraft).
A post hoc PEST is a very good idea
@trephena Firstly thank you for replying so promptly, it means a lot!
I like the idea of examining trends of the post-acq financials, I suppose my only worry was based on some of the earlier comments you raised in this forum that the examiner doesn’t like speculative answers and I feel if I said “x has increased…this shows the acq of the company was beneficial” etc – but this is better analysis of the financial position than none at all.Yes I have tried to evidence as much as I can from a variety of sources to back up all my claims, so instead of just citing sources, I’ve found data, analysed it and provided graphs etc to support these points of view.
My companies were actually Amazon’s acquisition of Whole Foods
As a summary:
Economies of scale: WF’s struggled due to low no. stores, high prices to consumers – poor e.o.s
AMZN: Benefits big time from e.o.s due to size and scale and operating on “no profit model”
Post acq: AMZN can offer these e.o.s to WF’s and lower prices of WF’s to improve foot traffic and thus sales of WF’s and awareness
Supported by: I made various graphs of prices of WF’s pre/post acq and showed impact of prices pre/post and how after AMZN’s acquisition, they lowered proving AMZN has used its e.o.s to make an impact. Also added survey in which long term WF shoppers were asked if they’ve noticed any difference in price since AMZN acqShare price reaction:
Share price and trade volume graphs of AMZN/WF’s during the week of acq showing a clear spike on date of announcement as well as graphs of competitors (walmart, costco etc) all which declined and commented why this was the case (AMZN’s threat of low margin model, big e.o.s, monopoly presence)Synergies:
1) reduced shipping costs/logistics: previously, AMZN has faced increasing costs in this matter (shown by graph of amazons shipping costs 2016-2018 rising as well as becoming larger proportion of cost of sales and net margin analysis of all competitors and AMZN/WF’s)
Then stated how acq of WF’s lowers this due to 450 network/distribution centers from acquiring the stores and the amazon locker (customer go to WF’s to pick up amazon orders) – overall these factors mean costs should fall for AMZN versus no acq at all so synergy realised
2) Enhanced reputation/brand: pre acq: both companies have good brands etc
post acq: AMZN bought a physical presence as opposed to just online, so awareness increases, backed up by YouGov survey of customer perception of WF’s brand increasing since acq by AMZN and AMZN presence increased by selling AMZN products and prime deals in WF’s
3) Exploit/successfully enter into grocery market: pre-acq: AMZN tried numerous occassions and failed (backed up extracted customer reviews of AMZN Fresh showing increasing number of 1/2 star reviews year on year
Post acq: Point 2 above shows its got better but, I took customer reviews of whole foods and 1/2 star reviews of whole foods actually increased past acq date, showing maybe acq of whole foods isnt yet fully exploited and thus synergy maybe not realisedCulture:
AMZN: customer focused, cost cutting, harsh treatment of workers
WF: Decentralised, autonomous employee decision making, high margin, high costPost acq: conflicts as reported workers being layed off, no decisions made and turning centralised etc – evaluating that clash of culture is limiting success of acq
SWOT analysis done for both companies pre acq and to link to rationale for acq
And then I need to do the remaining points.
Ironically, I’m going to go over my word count and after the first draft need to seriously tone down to keep within 7,500 due to having to include all the models
I apologise for stating so much in detail, but my concern is that I’m not answering enough points financially/operationally to warrant a pass or would you say from the above that my RAP sounds full enough/covers enough areas?
Many thanks in advance for all your assistance, my Mentor is away on Holiday and I am planning on finalising before I go away next week and this guidance is much appreciated.
I am nor surprised you have run out of words if you have included all of that!
Topic 19 is a balance between quantitative analysis and qualitative analysis – however the most important thing is that you show evidence of doing some analysis for youself and you seem to be doing that. In fact you have what sounds like a very good report so well done.
Where count is an issue I urge my own mentees to edit parts 1 & 2.
@gillianm said:
I am nor surprised you have run out of words if you have included all of that!Topic 19 is a balance between quantitative analysis and qualitative analysis – however the most important thing is that you show evidence of doing some analysis for youself and you seem to be doing that. In fact you have what sounds like a very good report so well done.
Where count is an issue I urge my own mentees to edit parts 1 & 2.
@gillianm
Hi Gillian, firstly thank you for taking the time to review and respond to my concerns noted above, having some external perspective over my report has really helped assure me that I’m staying on the right track 🙂I’m glad its a good mix between both quantitative/qualitative since I was worried the question focused too much on financial ratios pre/post.
Word count wise, I definitely could scope out paragraphs from my part 1/2 but unfortunately I’m currently on ~4,800 for part 3 and I assume although the overall limit is 7,500 that each part 1/2/3 has to be limited to the prescribed amounts (1,000,2,000,4,500)? It’s no worries as there is certainly some content I can rephrase/amend to reduce my words 🙂
Thank you again Gillian, your advice is most appreciated and I hope you have a lovely weekend!
Take it from me as a former marker that it is the overall word count only that is assessed.
I actually tell (yes tell!) my students that they plan 5,000 words for Part 3 and arrange the rest accordingly.
@gillianm said:
Take it from me as a former marker that it is the overall word count only that is assessed.I actually tell (yes tell!) my students that they plan 5,000 words for Part 3 and arrange the rest accordingly.
@gillianm That’s great news to hear and will certainly ensure I have a broader range to cover all my points raised. Thanks for all your help on these matters!Hi Trephena,
I have chosen this topic because i wanted to do something different from the topic 8 that all my teammates have chosen , I wanted to know if its really possible to pass this topic with only secondary sources of information.
Since i have chosen Amazon as my acquirer company, there are alot of information available and the result of the acquisition is not so great since it has been only 2 years now.
I have chosen SWOT , Force Field analysis and ratio analysis as my business models.
However i feel the models have repetitive conclusions , please help guide me!Thank you,
ShreyaThe focus probably should be on synergies. Consider the strengths and weaknesses of both companies and the advantages of combining these. In the financial analysis try to show whether there are signs of the synergies working (or not as the case maybe).
I dint submit my project due to fear, since the company I’ve chosen doesn’t have much details regarding the acquisition, especially because the acquired company isnt listed and so financial consequences are difficult to analyse.
I wanted to know if i can select M&As that have taken place before 3 years , for eg: 2015 acquisitions. Because i read that the companies must be chosen within a time frame of previous three years , but for acquisitions, the consequences will only be visible in the longer term , hence I find it difficult to select a company within the time frame of 3 years.
Please help?The rules are quite strict and you should not deviate from them without seeking direct permission from the university.
I agree a 5 year time frame would be more realistic. All you can do is contact acca@brookes.ac.uk and put a case forward for using a particular company and see if they grant permission for you to use that company if it is more than 3 years. Otherwise you will have to go with the prescribed requirement of 3 years or you risk an instant fail.
Good luck!
Hi Trephena or Gillian.I have chosen topic 19 for my obu rap May 2020 submission.i have chosen the 2017 acquisition of Jimmy Choo by Michael Kors.im currently working on the analysis and evaluation part.for pre acq i will use 2016 n 2017 financials.post acq i will use 2018 n 2019.however,during f19 Michael Kors also acquired Versace.now i dont know how this can impact my evaluation of financial perfomance post acq as there is versace results in th consolidated financials.please assist.
I have chosen the Swot analysis as on of my business models. Im jus doing th swot analysis for th organisation in general irregardless of pre or post acq.i have also selected porters 5 force analysis inorder to assess th competitive advantage.
One of th reasons for acq of JC was For Mkh to have a balanced product portfolio so can I also use BCG matrix as a model to asses th product portfolio.@shelmonique – when there have been other acquisitions this can be a bit of problem. When it comes to sales if you have Versace figures for the 3 years prior to its acquisition you might by using regression analysis, be able to forecast what the trend in its sales was likely to be for V and deduct this from the MK group total sales after acqusition (adjusting for how many months V was part of the group)
A SWOT can be one of the models – it would be more appropriate to do this for Jimmy Choo as it would be more natural then to progress to the synergy analysis and why MK decided to acquire JC – probably because of JC’s strengths – one of top brands in the shoe market whereas MK’s strength was handbags, however the two products are complementary and some of the same suppliers could be used saving on costs for example, similar target market customer etc.
You might be able at the end to mention very briefly the Versace acquisition as this gives access to the designer clothes market
thank you Trephena for taking your time to answer me.another question that i have is this,aftr michael kors acquired jimmy choo it retained its name.but aftr it acquired Versace,it changed the group name to Capri Holdings.am i correct for ignoring the Capri and keep on using Michael Kors since im looking at the acquisition between michael kors and jimmy choo only
Just stick with the main issue i.e. the acquisition of Jimmy Choo by Michael Kors. The change of name and restructuring to Capri Holdings was probably done for tax purposes. It is perhaps something to mention in passing but don’t get too distracted by it.
Hello, I’m planning to submit the RAP on topic 19 for the upcoming period 44 in May 2022. I do understand that this is an uncommon topic due to its extensive research and complexity.
I plan to conduct my research on the case of Disney acquiring 21st Century Fox in 2019, satisfying the “3-year historical event requirement” while enabling me to have more data for evaluation.
To get started, I would really appreciate your guidance on choosing a suitable evaluation framework/business model/accounting theories to use in this research.
For the “Financial consequences”, I plan to initially calculate the enterprise value of Disney then compared it with the actual amount paid, forming my own evaluation of the acquisition.
Next, I would evaluate whether the EPS is Accretion or Dilution & share price performance pre & post-acquisition. I would also conduct ratios analysis for Disney per & post-acquisition to fully evaluate its financial performance.As for the “Operation consequences”, I currently think to include the “synergy effects”, but I’m struggling to identify a suitable model/framework for this part.
I can only think of some headlines for this part such as an increase in market share (Media & entertainment sector), the potential for revenue & cost reduction…This part just does not seem to be linked together with my current knowledge.Would you kindly provide feedback for this approach of mine to the project; any recommendations and advice would be greatly appreciated.
Thank you very much in advance and I hope my project and your help would be helpful and contribute further to this topic in the future.
A SWOT of the company acquired should be the starting point to indicate what opportunities it offered and leads on to why Disney may have acquired it. This is then done by looking at the synergies and doing synergy analysis – these are the usual models for this topic.
The crux to the financial analysis would be an examination of the acquisition premium paid and whether this resulted in a subsequent rise in Disney’s share price either immediately or soon afterwards and then whether the revenues and profits held up. Don’t forget that the premium will be reflected as goodwill
Bear in mind that according to the Harvard Business School that about 70% of acquisitions / mergers are not particularly successful do not be surprised if the subsequent analysis does not demonstrate that much added value was actually achieved, According to Kode, Ford & Sutherland many do not succeed because synergies are not achieved, lack of pre-acquisition due diligence and proper integration planning – seehttps://www.researchgate.net/publication/335153701_A_conceptual_model_for_evaluation_of_synergies_in_mergers_and_acquisitions_A_critical_review_of_the_literature
Hello and thank you very much for your help Gillian.
Currently, I’m working on the financial analysis first, I would use the DCF model and compute the Enterprise value for both Disney and Fox pre and post-acquisition, compared with the actual consideration paid, thus, being able to identify the premium paid.
Besides the WACC (which I’m having multiple assumptions as the data is not fully available), the crux for me right now is to identify a suitable “growth rate” for this model. I tried a CAGR on Revenue (~5.7%), I also read about analysis that used GDP or inflation as the growth rate (around 2-4%)…so now I’m just not certain which rate is applicable with a reasonable justification? With the size of the Disney company, I would assume that any growth rate near 10% is too high & unrealistic.
In addition, with the impact of the Covid-19 pandemic, Disney’s operations suffered and dragged its performance down drastically in 2020 & 2021. As I evaluate the post-acquisition performance of Disney, how would I reasonably differentiate the impact of the Pandemic vs the impact from the acquisition?
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