"Are You Paying Too Much for That Acquisition?"
Read the assigned article, "Are You Paying Too Much for That Acquisition?" by Eccles, Lanes, and Wilson, from Harvard Business Review (1999).
In the textbook, complete the following problems.
Problem 7.11 (Show calculations for a, b, and c.)
Problem 7.12 (Show calculations for a and b.)
Using information from "Are You Paying Too Much for That Acquisition?" address the following with a minimum of 500 words.
List and describe the components used to calculate synergy value.
Critically evaluate which component is most underestimated. Explain your answer.
Firstly, Vittola argues after a war, it is the responsibility of the leader to judge what to do with the enemy (Begby et al (2006b), Page 332).. Again, proportionality is emphasised. For example, the Versailles treaty imposed after the First World War is questionably too harsh, as it was not all Germany’s fault for the war. This is supported by Frowe, who expresses two views in jus post bellum: Minimalism and Maximalism, which are very differing views. Minimalists suggest a more lenient approach while maximalist, supporting the above example, provides a harsher approach, punishing the enemy both economically and politically (Frowe (2010), Page 208). At the last instance, however, the aim of war is to establish peace security, so whatever needs to be done can be morally justified, if it follows the rules of jus ad bellum.
In conclusion, just war theory is very contestable and can argue in different ways. However, the establishment of a just peace is crucial, making all war type situation to have different ways of approaching (Frowe (2010), Page 227). Nevertheless, the just war theory comprises of jus ad bellum, jus in bello and jus post bellum, and it can be either morally controversial or justifiable depending on the proportionality of the circumstance. Therefore, there cannot be one definitive theory of the just war but only a theoretical guide to show how wars should be fought, showing normativity in its account, which answers the question to what a just war theory is.
Sample Solution
The article “Are You Paying Too Much for That Acquisition?” by Eccles, Lanes and Wilson (1999) describes the components used to calculate synergy value. Synergy value is a measure of the amount of money that can be generated from an acquisition beyond what would have been expected from each company’s individual results (Eccles et al., 1999). The following are components that can be used in this calculation:
1) Revenue Increase - This measures how much additional revenue could be gained due to combining resources and capabilities with the acquired firm. It represents the difference between projected sales before and after the merger or acquisition (Eccles et al., 1999).
2) Cost Reduction – This component looks at potential savings in costs such as production, marketing, advertising, and distribution. For example, if two companies are merging they might be able to capitalize on economies of scale by utilizing existing resources instead of having to create new ones (Eccles et al., 1999).
3) Efficiencies– This component measures any efficiencies that can come from combining forces such as increased leverage in negotiations with suppliers or improved customer service through expanded reach (Eccles et al., 1999).
4) Tax Benefits – This looks at how much money can be saved through tax breaks associated with an acquisition. Mergers may provide certain benefits including lower corporate tax rates and deductions for certain losses related to acquisitions (Eccles et al., 1999).
In conclusion, these four components taken together make up synergy value which helps determine whether an acquisition is beneficial or not financially for both parties involved. It is important for those considering mergers or acquisitions to carefully evaluate each component in order to make sure it provides real financial benefit over time.