Landmark Facility Solution Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Landmark Facility Solution Case Solution

Introduction:

Tim Harris, CEO of Broadway Industries was thinking about securing Landmark Facility Solutions as he trusted it was a chance to make Broadway an truly integrated management workplace supplier. The task manager helped Broadway to make the decision of acquiring Landmark facility, which is a medium-sized services provider to ensure high quality service profits at low overhead expenses.

It was a $120 billion business sector in US with a yearly development rate of 6% and and it provided corresponding management arrangement suppliers with presence in different areas that were exceptionally positioned to gain from. Tim believed that, this acquisition would help them offer integrated services and help them enter a new market.

The objective of the case is to discuss issues Broadway can face, along with the valuation of this acquisition opportunity, and to make a right decision to raise capital for transactions with an optimal capital structure.

The problem/decision faced by Broadway Industries and the options the company faces:

Broadway hired a task force of senior management and financial advisors to decide whether the acquisition project is feasible, or not. also In addition, to help in deciding the bid. They believed that this acquisition would be beneficial for both companies, as they would want to increase their quality of services since they provide same types of services with a reduction in overhead expenses. The task force suggested offering Landmark’s brand at a premium price in order to market Broadway products by using a premium pricing strategy with its customers.

Risks faced by the company include:

New pricing strategy may decrease the projected revenue by 10% in 2015 and 2016, which would be recovered in coming years.
The Broadway will unable to manage the large and complex team organization.
Doubling the size of equity would make managing the day-to-day operations challenging.
Premium marketing strategy would decline operating margin for Broadway.

SWOT Analysis

Landmark Facility Solutions:

Strengths:

Regional janitorial service provider.
Large integrated service provider for customers.
High quality service provider, with technical expertise that charge premium price to consumers.

Weaknesses:

The company is not generating enough cash
Operating margins have declined in past years and cash balance has declined to lowest level among all years
Willing to sell to Broadway due to losses

Opportunities:

To combine with a firm that has high cash slack or high return projects
To raise new capital to finance expenses and recover the situation
To take over a cash-poor firm that has good investment opportunity.

Threats:

Limited coverage of amount after selling to other companies that solely depend on the number of sales
Difference of opinions between members of management regarding acquisition of the business

Broadway Industries In.:

Strengths:

It Provides janitorial services, floor & carpet maintenance, HVAC etc.
Better financial position and majority ownership holder in company
Investing to acquire Landmark in order to become more competitive

Weaknesses:

It may lead to short term financial consequences after paying a huge amount
Customer may feel that price will increase and they might turn to cheaper alternatives

Opportunities:

Acquisition would help to eliminate future competition
Help to increase debt capacity due to earnings and cash flows becoming more predictable

Threats:

Reduce the company’s performance after acquiring a high service quality company
To cultivate the culture of operational efficiency

Industry Analysis:

Decisions Broadway Industries faces fit into the market they operate in:

As both the companies offer same types of services, in industry various small and private firms integrate in order to become more competitive within the industry..............

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