The president of Zeus Strategic Investments Inc. was reviewing an acquisition chance related to a spin off of a division of Maxim Automotive.
The president believed that it provided an exceptional chance to create significant value in an extremely short period of time with a very small amount of equity.
Maxim Off Highway Axle Business An Acquisition Opportunity (A) Case Study Solution
He was particularly concerned about getting a clear grip on the historical and projected financial statements supplied by Maxim. Historic financial information would need to be extracted from the Maxim corporate records and corrected to reflect the anticipated trade, including revealing the potential additional costs of running the business on a standalone basis and removing some corporate allocations.
The president was also concerned about potential liabilities in the office statements and the accounting for liabilities, as frequently these liabilities were taken at the corporate level, rather than at the division level.
Learning Objective: This case series can be used including the due diligence process to discuss an acquisition chance from the point in time of original contact through to the discussion of the purchase price, at the undergraduate or MBA degree.
It provide the pupil with the chance to think beyond the numbers to problems of human resources, strategy, marketing, and financing. The case series would be appropriate for a finance course focused on business acquisitions.
Publication Date: 08/23/2011
This is just an excerpt. This case is about Accounting
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