Vodafone Took Over Hutchison Essar In India Finance Essay - Free Essay Example

Sample details Pages: 5 Words: 1501 Downloads: 8 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? Consolidation of business entities is a world-wide phenomenon. One of the tools for consolidation is mergers and acquisitions. Mergers and Acquisitions (abbreviated MA) is an aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture.(Wikipedia). Don’t waste time! Our writers will create an original "Vodafone Took Over Hutchison Essar In India Finance Essay" essay for you Create order It is not uncommon that two companies unite to achieve complete advantages. Similarly it is quite common that a company take over another company as part of its growth strategy. Usually such business combination improve productivity of resources and thus benefit shareholders of both companies. Still, we can find many evidences that their success is by no means assured. There are a number of challenges faced in case of mergers and acquisitions sometimes before they actually start to function(eg. merger between HP and Compaq) or even after the MA. Few of the challenges faced in case of an MA are legal contemplations ,compatibility problems, fiscal catastrophes, problems as a result of cultural dissimilarities, hospitality and hostility issues, risk management failure, obtaining the necessary votes (two-thirds (or even more) of the share votes) can be time-consuming and difficult, cooperation may not be easily or cheaply obtained, merger also may be creating a conflict of objectiv e between different businesses ,diseconomies of scale if business becomes too large. In India ,in legal sense MA is also known as Amalgamation. Accounting Standards -14 on accounting for amalgamation issued by ICAI which comes into effect in respect of accounting periods commencing on or after April 1st 1995 is mandatory. Merger and Acquisition Accounting is done either by Pooling of interest method Purchase method Amalgamation in the nature of Merger Amalgamation in the nature of purchase ACCOUNTING METHODS WITH THEIR CHALLENGES: 1.Pooling of Interests Method: In this method, transactions are considered as exchange of equity securities. Here, assets and liabilities of the two firms are combined according to their book value on the acquisition date. The total asset value of the joint company equals the sum of assets of the separate firms. In this case, the accounting income is found to be higher than in the purchase method, as the depreciation in the pooling method is calculated based on the historical book value of assets The drawbacks/challenges with pooling method are: Though popular in other countries, the pooling of interest is no longer allowed in some countries like Canada, U.S. Prior to the pooling, each companies must have been autonomous for at least two years and must have been independent in the sense that less than 10 percent of its stock was held by any individual investor. There must be maintenance for the ownership position in the surviving company. No debt can be used in the exchange There must be no planned future transaction that could reserve the stock nature of the exchange. There must be no significant sale of assets for two year after the pooling. 2. Purchase Method: The asset and liabilities of the merged company are presented at their market values as on the date of acquisition, in order to ensure that the resulting values of the accounting process are able to reflect the market values. This refers t o the value, which was recorded before the final settlement of the acquisition deal at the time of bargaining.In this process, the total liabilities of the joint company equals the sum of individual liabilities of the two separate firms. The purchase price then determines the amount by which the acquiring firms equity is going to increase. The drawbacks/challenges with purchase method are: it may overrate depreciation charges. the book value of assets used in accounting is generally lower than the fair value if there is inflation in the economy. Thus,if at the time of the amalgamation,the acquiror and acquiree have conflicting accounting policies ,a uniform set of accounting policies should be adopted following the amalgamation. Q.2. What are the points a specialist should keep in mind while valuing a company? There are several techniques to value a business: VALUATION TECHNIQUES MARKET BASED ASSET BASED INCOME BASED Market based method: Valuation related to mergers and acquisitions estimated by the market based method, compares various aspects of the target company with the same aspects of the other companies in the market. These companies (not the target company) usually possess a market value, which has been established previously. . Asset based method: Valuation related to mergers and acquisitions employ this method when the subject or the target company is a loss making company. Under such circumstances, the assets of the loss making company are calculated. Along with this method, the market based method and the income based method may also be employed. Valuations obtained from this method may generate very small value, however it is more likely to generate the actual picture of the assets of the target company. Income based method:Valuation related to mergers and acquisitions employing the income based method take the net present value into consideration. The net present value of income, which is likely to be in the future, is taken into account by the application of a mathematical formula. There are many factors that need to be keep in mind while valuing a company,such as: All three methods of valuing a company are significant depending upon the situation prevailing during the course of the mergers as well as acquisitions. Valuation needs to be dynamic and not static, which means that the same transaction would be value by the same player at different values at two different times, since business is based on expectations which are dynamic. Due diligence has to be exercised in deciding the valuation parameter,since parameters differ from sector to sector. Companies/specialist need not only to respond wisely but often have to respond quickly as well because of the competitive nature of the acquisition market. A well conceived valuation programme that minimizes the risk of buying an economically unattractive company or paying too much for an attractive one is particularly important. Synergies fruitify only when social and cultural issues post merger could be sorted out very earlyin the merger. The financial soundness of the subject company. The financial trends over the past couple of years. The trends manifested in the macroeconomic indicators also need to be judged. Q.3.What do you mean by Leveraged Buy-Out(LBO)? The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. , there is usually a ratio of 90% debt to 10% equity. Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company. As the debt usually has a lower cost of capital than the equity, the returns on the equity increase with increasing debt. The debt thus effectively serves as a lever to increase returns which explain the origin of the term LBO. LBOs can have many different forms such as Management Buy-out (MBO), Management Buy-in (MBI), Secondary buyout and Tertiary buyout among others and can occur in growth situations, restructuring situations and insolvencies just like in companies with stable performance. The purpose of an LBO( also known as hostile takeover,or highly-leveraged transaction, or bootstrap tran saction) is to make a large acquisition without having to commit a lot of capital. maximize shareholder value by attempting to create a stronger and more profitable combined entity. Some advantages and disadvantage are given below: Advantages- 1.MBO can prevent a company from being acquired by external sources or from being shut down completely. 2. Poorly managed firms prior to their acquisition can undergo valuable corporate reformation when they become private ,a, company can revitalize itself and ear n substantial returns. 3.Since LBO involves a high debt-to-equity ratio, large corporations can easily acquire smaller companies with very little capital Disavantages- 1.The high interest rates from the high debt-to-equity amounts can result in a corporationà ¢ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¾Ãƒâ€šÃ‚ ¢s bankruptcy. 2.Management buyouts can produce conflicts of interest among employees, executives. 3. LBO can also lead to unemployment because of corporate restructuring.This means ,at times,companies may have to downsize their operations and reduce the number of paid staff. EXAMPLES: The worlds most famous LBO is the approximately $25 billion takeover of RJR Nabisco by private equity firm Kohlberg Kravis Roberts in 1989. The deal was so famous and bold that it was immortalized by the book and movie à ¢ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ÃƒÆ'†¹Ãƒâ€¦Ã¢â‚¬Å" Barbarians at the Gateà ¢ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¾Ãƒâ€šÃ‚ ¢. Another example of the largest LBOs on record was the acquisition of HCA Inc. in 2006 by Kohlberg Kravis Roberts Co. (KKR), Bain Co., and Merrill Lynch. The three companies paid around $33 billion for the acquisition. Doing an LBO is expensive and the process can be complex. When a particular deal is especially large, there is often more than one acquirer which allows for sharing of the risks, costs, and rewards of the deal.

Carbon Dioxide And The Effects Of Climate Change - 1517 Words

Carbon Dioxide and the Effects of Climate Change At the 2016 Oscar awards, Leonardo DiCaprio received a long-awaited first Oscar, only to mention climate change as, â€Å"the most urgent threat facing our entire species.† Talk of climate change has become more prevalent in recent years, but has not done so unjustified. Global ambient air temperatures have risen at alarming rates and are projected to rise up to 6 degrees Celsius by the year 2100. Such drastic changes in the air temperature will not only have an effect on heat distribution, but could prove disastrous to individual ecosystems and the overall biosphere of planet earth. Many ecosystems are a delicate balance of plant and animal life and, when altered by slight margins, can harm carbon cycles and imperiled species. Furthermore, evaporation and precipitation rates will also morph over time to match the changing of the seasons, further antagonizing severe weather patterns. 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Swot Analysis Free Essays

3. 0 Strengths, Weaknesses, Opportunities, Threats Analysis (SWOT) A SWOT analysis was directed to categorize varies areas that could positively or negatively affect the business and through this a risk analysis was formed. The following section addresses this concept. We will write a custom essay sample on Swot Analysis or any similar topic only for you Order Now STRENGTHS * Differentiation * Location * Appeal * Target market prominent in area | WEAKNESSES * High levels of competition * Cost strategies * Brand recognition * Unknown levels of financial and customer support * Limited customer range | OPPURTUNITY * Growth of target market population * Location in terms of accessibility * Franchise * Centre popularity | THREATS * Direct and Indirect competition * Pricing demand from both competitors and customers | 3. Risk Analysis It is essential to the success and continued future success of the ‘Student Hub’ that marketing strategies and techniques are put in place to suit the desired outcome of the newly founded business. As a combination of an eat in cafe and a student meeting and study point it is essential that all measures are put into place to retain the largest possible market share of the desired target market. Through the affordable food and beverage options and the highly accessible location the hub is creating an ideal place for students not only of the university but of the surrounding area addressing a gap in the current market for the suburb and surrounding areas. Through analysis of the current and popular businesses located close to the student hub it is expected that some businesses may approach the newly defined section in the market and compete to gain popularity and customers. These threats will be counteracted by the business proceedings of the ‘Student Hub’, through controlling the price point and extending only the upmost standards in terms of products and services. The ultimate threat of the business is the desired location of the university being the major competitor holding resources and the ‘easier option’ for students wishing to study. However this threat is overcome by the originality and niche experience that the ‘Student Hub’ will provide leaving it in a prime position within the established market creating something for students to enjoy with either relaxing or studying. How to cite Swot Analysis, Papers SWOT analysis Free Essays This resulted in Telephone Interpretation being offered since that year. This service connects trained Interpreters via telephone to Limited English Proficient (LEAP) Individuals. Curaà §ao International Is one of those companies that provide critical translation and interpretation services. We will write a custom essay sample on SWOT analysis or any similar topic only for you Order Now Worked full time there as an interpreter, which is a chance to gain some insight about the company’s workplace as well as into the language service. Let’s have a look back at history of the company and perform a SOOT analysis. HISTORY According to the company’s homepage, Kevin J. Carrey and Mark Myers patented the first dual-handset phone and founded the company In Tucson, Arizona since 1995, which they named Severer. Three years later, the company’s name was changed into Curaà §ao International with Jeremy Woman being Chairman and CEO. It created a subsidiary, Viviane, In 2009, there were 2 big events to the company. It first announced the calculation of Language Learning Enterprises, Inc. (LEE) and second, opened the Tucson contact center. Its Phoenix contact center was next, In 2012. Like its competitors in the industry, Curaà §ao International Inc. (mentioned here as â€Å"Curaà §ao† or the â€Å"company†), is a diversified language services company, operates wrought Its two sections: Curaà §ao Is for clients In the field of healthcare: healthcare plans, clinics and hospitals, and Valance Is for bal and governments: Insurance, financial services, education, 911, utilities, telecommunications. The products include: Over-the-Phone Interpretation (POP), Video Remote Interpretation (IVR), On-site Interpretation, Document Translation, and Training and Assessment. This information is not quite accurate, at least at present. While working there in 2013 1 saw that clients had to pay $4 per minute and interpreters’ received approximately $1 5 an hour ($10 for Spanish interpreters). No wonder Curaà §ao is placed within the Top 15 companies reporting an average rate of growth of 72. 75 percent growth in 2008. (â€Å"Second annual ranking,† 2011) Weaknesses Firstly, at Curaà §ao there is hardly a strong organization culture. It seems that the company chooses to focus on the call center side of things rather than create one. Many interpreters are misled in thinking of a company that values intelligence and language skills, when it turns out later that they hire bilingual persons to apply their protocols only. Consequently, interpreters should be content with low salaries; this bob does not require a degree. And that is at the time of interviews. Next, there are distinct departments and lines of authority, work activities are designed around individuals. In this call center, 100% of calls are recorded and monitored and employees are required to follow extensive rules and regulations and to minimize formal contact with other employees if not functionally necessary. One supervisor sits at higher booth keeping an eye on 10 Interpreters. A manager of each department (that handles one language) walks around examining closely to ensure there are no deviations. Indeed, this is management in the survival mode and there is no workplace spirituality. And that leads the second weakness of Curaà §ao, High Employee Turnover compared to industry averages. Current HCI recruiter, Richard Arena, is a forever busy person. During the 2 years I knew him he was present at almost every Job fair in the Valley. Not only offering both part and full time Jobs, he made recruiters of other company in the fair to point any ethnic minority Jobsharers to his booth. Not only have Richard and his HER team worked really hard, but the company has had a long time policy that any employee gets a $200 reward after successfully bringing in a new interpreter to work for Curaà §ao. Apparently, something underlies the fact that the company is â€Å"Arizona fastest-growing Job creator in 2013 and second fastest in 2012 for creating over 800 Jobs in the state† as it claims in its homepage. Opportunities Executive Order 13166 are two out of many opportunities that the language service industry in general, and Curaà §ao in particular have encountered. Fortune Magazine views the approximately â€Å"9% of people in the U. S. Who don’t speak English a sizable market waiting to be tapped† (wry. Fortune. Com/addictions). They are right, as according to the U. S. Census, a foreign migrant enters the United States every 22 seconds. These people need insurance, healthcare as well as other products and services†¦ Hill the agents and insurance carriers need the means to explain and sell them. This partly accounts for the phenomenon that language services industry having the growth and revenue numbers that resist recession. On August 1 1, 2000, then-president Bill Clinton signed Executive Order 13166 which â€Å"requires that the Federal agencies work to ensure that recipients of Federal financial assistance roved meaningful access to their LEAP applicants and beneficiaries† (n. D. ). It is expected that that the total national cost of providing language assistance services to LEAP individuals could be as high as $1 to $2 billion annually (â€Å"Why executive order,† 2011). This resulted in the domestic market alone being surprisingly robust-and growing for Curaà §ao as well as other language service companies. Threats At Curaà §ao, it’s hardly spoken within the call centers, but we employees all know that Languages Solutions is our long-term and strong competitor who may represent a wreath to future market growth of Curaà §ao. Languages â€Å"employs approximately 5,000 interpreters† (in compare with 1200 of Curaà §ao) (â€Å"Second annual ranking,† 2011). It provides the same products but much bigger quantities nationwide, for example, about 90 percent of the over-the-phone interpretations for 911 emergency calls. In fact, most important governments are clients of Languages. Just go to such offices as social security, CUSCUS, DES and you’ll see the logo of Languages in a poster showing that free interpretation is available. Curaà §ao has to face this to say it hoses to focus on healthcare instead. How to cite SWOT analysis, Papers