the benefits and changing with the external environment made it a significant attribute in Aqua Company to get acquired in Logistics sector. It is followed by the global presence and better equity position of the company which attracts the acquirer to enjoy the benefits by consolidating with Aqua Limited.

Moreover, the strong base of its assets and the latest technology used for delivery system makes the company stand out in the industry which attracts the acquirer for merging with this company. This also leads to better relationship with its clients and increasing the customer base which will result in the economies of scale and this will lead to the synergy generated from the operations for both the companies.

This may result in the synergy of capabilities and strength in functional departments for both the companies with value addition in their services and making the services better and effective by use of effective medium of transport.

AQUA Logistics Limited Harvard Case Solution & Analysis

Value Drivers:

It is necessary for the acquirer to first look at the value drivers before acquiring the target company so that it may be able to forecast its estimated value for getting the maximum benefit from the deal. These value drivers show the financial impact on the forecasting of the future cash flows. However, the non-financial value drivers which may be considerable for the Acquirer such as infrastructure and taxation policies but these cannot be quantified for the calculation of discount cash flow valuation.

Forecasting of the cash flows

The most effective value driver for ALL is forecasting of the cash flows. It shows the effectiveness and efficiency of management to maintain the liquidity position and maintain its revenues. This will lead to the valuation of a company if it is sold and the available risk over it. There is inverse relationship between losing the risk of cash flows and the price paid for acquiring the target company.

Diversity in Customers:

It is necessary to evaluate the customer base of the target company as it helps in maximizing its revenues and benefits from the synergy. If the customers are contributing significantly in company’s revenue, then they should be given importance. If they are lost, then the company will lose its significant portion of sales. Moreover, with the change of ownership, they may lose confidence and trust in company and this may result in liquidity issues for the company.

Financial Information and estimation reliability:

The target company needs to present its past financial statements for the evaluation of its performance. It shows the true and fair picture of the company’s revenues and profitability for the acquirer and not merely on the basis of cost. However, company needs to evaluate the cost effectiveness of the target company. If there is misrepresentation in the financial statements of the target company, it will affect the decision of acquisition.

Growth potential of the company:

This shows credibility of the target company for forecasting the future cash flows and defending the growth rate of the cash flows, which is that showing correct value of the company will give the company leverage for getting high value from the acquirer..............

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