Centerbridge Partners and Great Wolf Resorts: Buying from a Highly Regarded Competitor Case Study Help
Alternative 02: Do not acquire Great Wolf
There are certain risks that are associatedwith the acquisition of the Great Wolf; the expansion of business operations requires enormous amount of capital, which in turn would require the company to beef up cash flows, or else it would be stuck using cash for refurbishment instead of expansion. As the company is thinking to get consolidated with another stations; it might result in an increased number of management issues and concerns, which could last aggressive effects on profitability and other advantages of the company. The risk of alienating several workers was worrisome in early stages, when the company intended to bring changes in senior management of Great Wolf.
Conclusions and recommendations
After taking into account the quantitative and qualitative analysis of decision of acquiring Great Wolf; the company is advised to acquire the company because of the fact that there are various benefits associated with the acquisition of Great Wolf. As per the information provided in the case; the business of Golf Wolf was resilient and cash flows were relatively stable, even in the wake of Great Recession in 2008 and 2009. It is believed by Centerbridge that Great Wolf has the potential to improve its pricing, using more sophisticated techniques to help smoothenthe flow of revenue through the seasonal cycles of vacation industry & through typical weekly cycles with considerable peak in revenues around dip-mid weak and weekends. Not only this, assessing the financial standing of company provides a strong foundation of acquiring it because of the reason that the company was capable enough to generate healthy amount of revenues even in recession, at the 7% compounded annual growth rate; whereas, the compounded annual growth rate of adjusted EBITDA was 10%.
Within the spending trend, it was discovered by deal team that consumers started shifting their travel spending from international to domestic, which has considerably benefited the Great Wolf. Alsointhe fall of 2014.According to the research of Centerbridge; the company was recognized as one of the 60 “Tier 1” North American based indoor water parks resorts, with national reach. Additionally, the company helps 15% of the entire market and operates 12 resorts nationally, which means that the company has substantially grown in the highly competitive market arena.(Goddard, 2018).
In addition to this, the company should choose the Commercial mortgage-backed security (CMBS) financing as it comes at lower borrowing rate and yields more funding as compared to a traditional PE structure. The market of CMBS has dramatically grown with the passage of time. Also, there is a less risk in the diversified pool of securitized mortgages on account of the fact that the loss from single default could be offset by the strength of remaining loans in the pool. Moreover, they are highly leveraged, non-recourse and are available to wide swath of borrowers(Furfine, 2013).
After acquiring Great Wolf, Centerbridge should strive to improve the satisfaction and experience of guests, enhance its digital marketing for the purpose of generating more interest & awareness among the public—”using SEO [search engine optimization] and other means. The company is also recommended to take an in-depth look over the effective management of revenue and make improvements accordingly.....................................
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