Acquisition Analysis Essay Example | Topics and Well Written Essays - 1750 words

Acquisition Analysis - Essay Example Such factors as internal and external market environment as well as Adobe priorities were examined, and it was found that acquisition is profitable for both companies. The three templates were designed to analyze broad, specific and other issues necessary to evaluate the risk and profitability of the project. It was supposed that the company IAP will invest about $ 1000000 from internal cash funds. Financial analysis proves that fact that the rate of return will be high if IAP invests $ 1,000000. Such calculations as WACC, risk assessment, CAPM, foreign currency translation effect, cash flow analysis have been madeThe initial assessment of markets conditions involves screening foreign markets to discover the potential of different countries. This process includes consideration of rates of growth of economies, new developments such as opening up of markets in developing and emergent economies, technical changes that are creating new opportunities to sell and identification of long-ter m economic and demographic factors that are altering demand patterns.With the globalization of the world economy, companies like IAP Company Limited are growing by merger and acquisition in a bid to expand operations and remain competitive. The complexity of such transactions often makes it difficult to assess all risk exposures and liabilities, and requires the skills of a specialist advisor. Four main types of assessment for companies considering acquisition beyond their national borders should be undertaken: political and legal conditions, economic conditions, cultural conditions, competitive conditions. USA-based company Adobe operates in the stable political situation, which has high rates of economic growth. Acquisition policy is undoubtedly the most radical growth strategy open to management in that it represents a deliberate attempt to change the nature of the business. Acquisition policy can be classified into backward, forward and horizontal integration. Acquisition policy occurs when the new business is related in some way to the old one. (Zolkiewski, 1994). Template 1: IAP Company Limited will be reluctant to enter countries that have high political risks unless the potential returns are high or when countries with high political risk are providers of raw material that are in short supply. When the overall market is growing or can be induced to grow, it may be relatively easy for companies with a small market share, or even new entrants, to gain share. This is because the absolute level of sales of the established companies may still be growing; and indeed, in some instances, those companies may be unable or unwilling to meet the new demand. Import penetration into some industries can be traced back to the early 1990s, when companies were unable to supply the peak demand occurring during booms and their customers had to seek alternative sources overseas (Benito, Gripsrund, 1992). Once established with overseas suppliers, many UK users were reluctant to revert to UK sourcing. When the boom was over, the importers held on to their market share. The size of the investment required by a business wishing to enter industry will be an important determinant of the extent new entrants. Acquisition with Adobe allows IAP Company Limited to subject to a complex regulate framework whereas others are less so. Still, even if it is possible to predict the needs of customer there are some threats and new opportunities, which should be taken into consideration. American administrative and legal environment is very favourable for acquisition with Adobe. There are no specific regulations governing the goals and structures of the industry, there is