Keane’s Acquisition of Metro Information Services (A) Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Keane’s Acquisition of Metro Information Services (A) Case Solution

In order to understand the key success factors of an IT industry, its business requires an analysis. It can be seen that this industry is dealing in the services business, which is mainly derived from the employees. This strongly concludes that the first and the foremost key success factor for the industry are skilled professionals, who could not only provide quality solutions for its customer, but could also help in achieving the competitive edge within the overall industry. The more developed and expert the employee, the more competent and effective services it can provide to the client. Not only hiring, but the retention of such professionals is also very important for these companies. In addition to this, the other very important factor that could contribute towards success is the significant customer base, which could be the real source of revenues for the companies.

Considering the current conditions of the industry, it can be seen that both of these factors are constrained in one way or another, causing the revenues of the overall industry to decline. As far as the first factor is concerned, it can be seen that there is endemic shortage of qualified professionals in the industry, which is its biggest challenge. On the other hand, the other key success factor is constrained by the presence of heterogeneous set of competitors operating in the market.

In order to find the overall effects on our underlying companies, it can be seen that both companies are dealing in the similar business. Furthermore, with the acquisition, the combined company can gain large number of skilled professionals who could significantly help the company in attaining its mission of growth and could result in providing competitive edge in the industry as well. In addition to this, with the help of this acquisition, the customer base could be increased very easily, which could ultimately result in an increment in the overall revenues of the combined company. Moreover, it could be able to achieve operational efficiencies by reducing cost and thus, result in synergy. Lastly, the acquisition could result in the gain of market share, which could results in improving the profitability conditions of the company, even in the down market.

Exhibit 4 of the case reveals the fact that Keane is acquiring Metro through purchase accounting and not pooling accounting with the help of stock transaction by offering its own shares in exchange for the company. From the overall analysis, it can be seen that the overall merger was organized as a tax free restructuring. This strongly concludes the fact that Metro’s shareholders would be completely exempted from the gains or losses, which might occur in the federal income taxes. Moreover, by law, the price paid as a consideration must only cover the value of stock, which concludes the fact that Keane Inc., in the combined company, could gain the statutory control on Metro Inc. Exhibit 4 represents the way the consideration was paid by Keane Inc. in order to acquire Metro Inc. For the stock for stock transaction, the value of average price is taken, which could yield the true results. Last but not the least; as per the agreement, Keane Inc. also paid bonuses for the executives of Metro Inc., as provided in Exhibit...................

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