...Anatomy of a merger: behavior of organizational factors and processes throughout the pre- duringpost-stages (part 1) Steven H. Appelbaum Concordia University, Montreal, Quebec, Canada Joy Gandell Concordia University, Montreal, Quebec, Canada Harry Yortis Hydro-Quebec, Montreal, Quebec, Canada Shay Proper Montreal Stock Exchange, Montreal, Quebec, Canada Francois Jobin Kruger, Inc., Trois-Rivie Âres, Quebec, Canada Keywords Mergers and acquisitions, Organizational behaviour, Process efficiency, Managers Introduction Since the late 1980s, the total number of mergers and acquisitions (M&As) has far surpassed the number that occurred throughout the 1960s. Whereas the M&As throughout the 1960s were mainly due to unions between conglomerates, the 1980s and 1990s has witnessed an increase in M&As between firms of different sizes and different industry types (Tetenbaum, 1999). The trend to engage in this type of vertical integration or diversification does not seem to show signs of diminishing in the near future. Yet, at best, the firm that initiates the merger usually only achieves normal economic profits while the value created rests almost solely with the firm that was approached (Barney, 1997). The primary purpose of merging and acquiring new firms is usually to improve overall performance (Lubatkin, 1983) by achieving synergy, or the more commonly described as the ``2 + 2 = 5'' effect (Cartwright and Cooper, 1993a; Hovers, 1971) between two business units that will increase...
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...ISSUES IN ACCOUNTING EDUCATION Vol. 30, No. 1 2015 pp. 47–69 American Accounting Association DOI: 10.2308/iace-50948 Diamond Foods, Inc.: Anatomy and Motivations of Earnings Manipulation Mahendra R. Gujarathi ABSTRACT: Diamond Foods is America’s largest walnut processor specializing in processing, marketing, and distributing nuts and snack products. This real-world case presents financial reporting issues around the commodities cost shifting strategy used by Diamond’s management to falsify earnings. By delaying the recognition of a portion of the cost of walnuts acquired into later accounting periods, Diamond Foods materially underreported the cost of sales and overstated earnings in fiscal 2010 and 2011. The primary learning goal of the case is to help students understand the anatomy and motivations of earnings manipulation. Specifically, students will have the opportunity to (1) apply the FASB’s Conceptual Framework to a real-world context, (2) determine the nature of errors and compute their numerical effects on financial statements, (3) understand motivations for earnings management and actions needed for managing earnings of future years, (4) explain the anatomy of financial reporting fraud by reconstructing journal entries, (5) prepare comparative financial statements for retroactive restatements, (6) explain the rationale for clawback provisions in compensation contracts, and (7) understand the difference between the real and accrual-based earnings management. Keywords:...
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...Getting an Inside Look: Given Imaging’s Camera Pill The factors which makes Iddan, an engineer with no medical background, to pioneer the development of wireless endoscopy are he as an electo-optical engineer and was working on developing the “eye” of guided missile to its target. His friend at boston gave him information about technology used for viewing the interior lining of the digestive system which had lots of limitations, specially with viewing the small intestine. This small intestine causes serious disorders and only in United States approximately 19 million people suffer from disorders. Existing technology like X-ray and endo-scopes were unable to identify or investigate about small intestine. So the only option left was surgery and which was very crucial if the physician does not know which part of the small intestine is affected. So his friend encourages him to come up with better technology. Due to technology revolution after decade small video cameras which uses image sensors like CCDS (Charge coupled devices) has been developed. With his knowledge from developing the eye of guided missile he tried to make small missile like device which could travel through the intestine without a life line leading to the outside of the body and transmit images wirelessly to a receiver outside of the body. He has also done small experiment on chicken with his developed camera and as he succeeds he got more encouragement but he found battery of that camera get exhausted in...
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...Diamond Foods, Inc.: Anatomy and Motivations of Earnings Manipulation Mahendra R. Gujarathi ABSTRACT: Diamond Foods is America’s largest walnut processor specializing in processing, marketing, and distributing nuts and snack products. This real-world case presents financial reporting issues around the commodities cost shifting strategy used by Diamond’s management to falsify earnings. By delaying the recognition of a portion of the cost of walnuts acquired into later accounting periods, Diamond Foods materially underreported the cost of sales and overstated earnings in fiscal 2010 and 2011. The primary learning goal of the case is to help students understand the anatomy and motivations of earnings manipulation. Specifically, students will have the opportunity to (1) apply the FASB’s Conceptual Framework to a real-world context, (2) determine the nature of errors and compute their numerical effects on financial statements, (3) understand motivations for earnings management and actions needed for managing earnings of future years, (4) explain the anatomy of financial reporting fraud by reconstructing journal entries, (5) prepare comparative financial statements for retroactive restatements, (6) explain the rationale for clawback provisions in compensation contracts, and (7) understand the difference between the real and accrual-based earnings management. Keywords: earnings management; financial statement fraud; restatements; error correction; clawback provision; Conceptual Framework...
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...Fashion Anatomy 320 Rosemeade Drive Dallas, TX 75287 FashionAnatomy@gmail.com Phone: 972-684-7664 December 16, 2012 Main Contact: Michael Smith www.fashionanatomy.com Table of Contents * Executive Summary…………………………………………………………………… 3-4 * Company Description………………………….........................................5 * Industry Analysis………………………………………………………………………..6 * Industry Size, Growth Rate, and Sales Projections…………………6-7 * Industry Structure…………………………………………………………………..7 * Nature of Participants……………………………………………………………..7 * Key Success Factors………………………………………………………………….8-9 * Industry Trends…………………………………………………………………………10-12 * Market Analysis………………………………………………………………………………12-14 * Market Segmentation Target Market Selection……..…………………..15-16 * Buyer Behavior………………………………………………………………………….17 * Competitor Analysis…………………………………………………………………..18 * Estimate of Annual Sales and Market Share…………………………………18-19 * Marketing Plan………………………………………………………………………………….20 * Overall Marketing Strategy……………………………………………………………20-22 * Pricing Strategy……………………………………………………………………………..22-23 * Sales Process………………………………………………………………………………23-24 * Management Team and Company Structure……………………………….25 * Management Team………………………………………………………………….25 * Board of Directors……………………………………………………………………25-27 * Board of Advisors………………………………………………………………………28-29 * Other Professionals…………………………………………………………………30 ...
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...Mergers and Acquisitions Introduction Mergers and Acquisitions, and the decrease in activity around this area, is a topic acutely relevant to management consultants and the overall business environment. The number of notifications to the Competition Authority was down thirty per cent in 2009 according to law firm McCann Fitzgerald (Maeve Dineen, Irish Independent, 2010). The facts also show that there was a decrease in the number of transactions in the second quarter of 2010, down to fifty-two to sixty-two, a drop of more than sixteen per cent (www.iicm.ie). A similar trend has continued in subsequent years. This movement is relevant to management consultants as organisations utilise management consultants to assist and advise before, during and after the process: “to draw on their unbiased analysis; to benchmark organisational processes against a range of best practices; to gain perspective and see the ‘big’ picture; and to provide training and related implementation support” (Buono, 2005, pp. 229). Many companies at the present time may be worried or reluctant to begin pursuing such a strategy. However, the use of and experienced and dedicated management consultant can be the difference between expanding their firm and stagnating. These demonstrate the importance of management consultants in the merger and acquisition process and why they are crucial elements for many organisations who elect to pursue such strategies. One recent news story whose management may benefit from...
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...Anatomy of an USD 8 billion mistake: HP & Autonomy merger Zachary E. Fender BMGT 335-800 July 14, 2013 Introduction. Hewlett Packard (“HP”) under the executive management of former Chairman Ray Lane and former CEO Leo Apotheker, wanted to acquire a leading software company providing technology solutions in the unstructured data search & retrieval specialty. British software company, Autonomy, was identified as a good candidate and in August 2011 HP published their intent to acquire it. Apotheker was not a popular HP CEO and was criticized about his famous failure with the Palm acquisition which cost USD 1.5 billion. He persuaded HP Board of Directors to proceed with a merger and the result was a disaster: USD 8 billion write down. History of deal. HP had a string of high level executive changes that led to a hasty decision to spend a colossal amount of USD 11 billion to buy a software company that used accounting standards different from the USA. Carly Fiorina then Mike Hurd then Leo Apotheker and now Meg Whitman constituted the ever-changing CEO position. HP CEO Apotheker overruled the opinion of the HP CFO and persuaded the HP Board of Directors to proceed with the acquisition. New and current HP CEO, Meg Whitman, was on the HP Board of Directors that approved the deal and has survived the fallout. A deal was made with the Autonomy founder and CEO, Mike Lynch. Soon afterwards, problems emerged and the entire Autonomy management team...
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...NAME- PIYUSH SANDUJA PGID – 61510241 COURSE – BBMK Section - I REPORT – Siebel System: Anatomy of a Sale, Part 1& 2 After looking into the positives and the negatives of Gregg Carman’s performance, I would rate Carman’s performance favorably. He tried to gain as much information as possible and also tried to play on Siebel System’ strengths rather than dwelling on Oracle’s negatives. Hence Carman maintained the Siebel values intact. POSITIVES OF GREGG CARMON’S PERFORMANCE 1) Compliance with Siebel core values: Carman, during his 15mins conversation with the VPs of client services & marketing of Quick & Reilly, completely complied with the Siebel core values as described in the Table below.. Sr. No. | Siebel Core Values | 1 | Serving our customers is not simply a market opportunity. Carman approached the situation with great humility. He didn’t boast of Siebel systems despite having market leadership. | 2 | Our respect for our customers is highly visible in everything we do. | 3 | As a company, we will never place financial gains above ethics. Carman preferred not to comment on its competitor even when straightforwardly asked by Cathy Ridley. | 4 | We choose to be leaders, but we do so with great humility. | 5 | We do not look for problems, we propose solutions. Carman showed them the demo of their offerings and how Siebel will be able to help propose a solution. | 2) Assessing a project opportunity: By conversing with the two officials...
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...Mergers and Acquisitions Instructor: Kai Li kai.li@sauder.ubc.ca Office Hours: by appointment Teaching Assistant: Zhang Jianing zhangjianing.jenny@gmail.com Office Hours: Wednesday/Friday 4:00 – 6:00pm Course webpage: http://finance.sauder.ubc.ca/~kaili/SAIF as well as on SAIF BB system Course objectives Corporate Finance is the art and science of making important corporate decisions under the guidance of relevant financial theory, advanced quantitative methods, and careful study of previous business decisions and outcomes. Mergers and acquisitions (M&As) offer a lens into a variety of financial management practices, and are a critical time in the life of a corporation. In this course we will use M&As as a focal point in our study of corporate finance. We will draw on, and extend your knowledge of finance topics including valuation, capital structure, financial distress, financial statement analysis, working capital management, securities markets, securities issuance, agency theory, corporate governance, executive compensation, and real and financial derivatives, and apply to M&As. Our study of change of control will include the economic motivations for M&A activity, advanced valuation, transaction structuring, creative financing, risk management, tactics for friendly M&A negotiations and hostile transactions, leveraged buyouts (LBOs), due diligence, and execution. By the end of the course you should: Be able to identify motives for transactions Understand reasons for...
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...our Hong Kong investment banking team took responsibility for deal execution. In marketing the offering worldwide, Goldman Sachs helped Prada present its story to more than 250 leading investors. The IPO raised $2.5 billion. It was the largest consumer goods IPO ever in Hong Kong, and the largest IPO to date of any global luxury brand. The offering enabled Prada to reduce its debt while funding future growth across China and the rest of Asia. By 2015, China alone is estimated to comprise 20 percent of the world’s luxury goods market. Prada is now positioned to make the most of this opportunity, and reinforce its image as one of the world’s most recognizable fashion brands. Goldman Sachs 2011 Annual Report 11 Raising Capital Anatomy of an IPO For private companies, “going public” is a landmark event. An IPO serves several purposes: raising capital to fund growth and acquisitions, enabling founders and investors to...
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...‘M&As: why don’t people ever learn from the mistakes of others? by William Richards Introduction Over the years, mergers and acquisitions research has identified the importance of leadership and workplace learning as critical determinants of M&A activities and outcomes. However, surprisingly little systematic attention has been paid to conceptualising or studying the impact and effect of either leadership styles or learning on the success of M&As – either in the academic or in the practitioner literature (Cartwright and Cooper, 2001) Although scholars and practitioners recognise that acquisitions frequently fail to live up to their potential (Larsson and Finkelstein, 1999), the impact of leadership on the outcomes of the acquisition process and the learning that takes place, has not been well developed or even widely recognised. A review of scholarly and practitioner focused writing on M&As suggest that while much has been written on the actual M&A process, others have only occasionally noted the critical importance of leadership and learning in the success or failure of M&As. Even in those cases where the leadership impact has been acknowledged, past work on M&As has neither examined nor proposed any details concerning what constitutes what learning that actually takes place during M&A or how it makes a difference. A review of academic and practitioner literature on M&A reveals that discussion of the primary determinants of M&A process and outcomes rarely ever...
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...Acquisition of Honeywell General Electric’s Proposed Acquisition of Honeywell Investment Decisions Analysis of Investment Decisions Analysis of Table of Contents Executive Summary 2 Strategic Considerations 4 Political Complications 4 Personalities Involved 4 Valuation Methods 5 Early Closing of Positions 6 Situation Analysis 6 Investments Effects on Closing Positions on the 1st March 2001 7 Late Closing of Position: 8 Investments Effects on Closing Positions after the 1st July 2001 8 Arbitrage Spread 9 Conclusion 11 Executive Summary The proposed merger between General Electric (GE) and Honeywell has been praised by the Companies and up until 1st of March 2001 been called “the cleanest deal you’ll ever see” by Welch, CEO of GE. On the 1st of March the antitrust regulator, The European Commission (EC), announces that they will perform a full review over the potential merger. If GE were to acquire Honeywell, they could become a dominant player in the Aerospace industry. This fact is underlying reason for EC’s review as their main objectives are to prevent market dominance, as effects of un-proportional market shares, and by that stimulate efficient competitive markets. This announcement introduce large factors of risk that needs to be considered by Gallinelli, an arbitrageur currently holding a large short position in GE and a equivalent long position in Honeywell. Ganelli’s investment success is highly dependent on the outcome of EC’s decision....
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...This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Mergers and Acquisitions Volume Author/Editor: Alan J. Auerbach, ed. Volume Publisher: University of Chicago Press Volume ISBN: 0-226-03209-4 Volume URL: http://www.nber.org/books/auer87-1 Publication Date: 1987 Chapter Title: The Growth of the "Junk" Bond Market and Its Role in Financing Takeovers Chapter Author: Robert A. Taggart, Jr. Chapter URL: http://www.nber.org/chapters/c5819 Chapter pages in book: (p. 5 - 24) 1 The Growth of the “Junk” Bond Market and Its Role in Financing Takeovers Robert A. Taggart, Jr. 1.1 Introduction “Junk” bonds, as they are popularly called, or “high-yield’’ bonds, as they are termed by those wishing to avoid pejorative connotations, are simply bonds that are either rated below investment grade or unrated altogether.’ Fueled by the introduction of newly issued junk bonds in 1977, this segment of the bond market has grown rapidly in recent years and now accounts for more than 15 percent of public corporate bonds outstanding. However, the growth of junk bond financing, particularly in hostile takeover situations, has been bitterly denounced. For example, Martin Lipton, a merger specialist with the firm of Wachtell, Lipton, Rosen, and Katz, has argued that junk bond financing threatens “the destruction of the fabric of American industry” (Williams 1984). In a similar vein, twelve U.S. senators signed a letter in support...
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...HealthSouth: The Scrushy Way Vonetta M. Henderson Northcentral University Introduction The Enron and Tyco scandals brought visibility to corporate scandals. The magnitude of these scandals resulted in the Sarbanes-Oxley (SOX) Act in 2002. Richard M. Scrushy and HealthSouth Corporation were the first CEO and company to be indicted under the SOX Act. HealthSouth was charged with filing false financial statements with the SEC to hid poor financial conditions from Wall Street. An audit conducted by PricewaterhouseCoopers concluded that HealthSouth overstated its cumulative earnings between $3.8 billion to $4.6 billion (Weld, Bergevin, & Magrath, 2004). Although Scrushy was charged with 85 counts, he pled not-guilty, claiming that he was unaware of the fraudulent activities that had occurred. Scrushy was later exonerated as the investigation into the company found no evidence that Scrushy orchestrated or participated in any financial wrongdoings. Five financial executives and 10 other company officials pled guilty to a variety of charges. Background Richard M. Scrushy founded Amcare, Inc. in 1984. The company opened its first facility in Little Rock, Arkansas and one year later opened a facility in Birmingham and changed its name to HealthSouth Rehabilitation Corporation (HRC). In 1986, HRC went public with its initial public offering (IPO) on the NASDAQ stock exchange (HealthSouth Corporation, 2010). In 1988, HRC moved to...
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...CURRENT ISSUES SERIES Mergers & Acquisitions: Organizational Culture & HR Issues Deborah A. Pikula IRC Press Industrial Relations Centre Queen’s University Kingston, ON K7L 3N6 Tel: (613) 533-6709 Fax: (613) 533-6812 E-mail: ircpress@post.queensu.ca Visit our Website at: http://qsilver.queensu.ca/irl/qsirc/ Queen’s University ISBN: 0-88886-516-3 © 1999, Industrial Relations Centre Printed and bound in Canada Industrial Relations Centre Queen’s University Kingston, Ontario Canada K7L 3N6 Publications’ Orders: 613 533-6709 Canadian Cataloguing in Publication Data Pikula, Deborah A. Mergers & acquisitions : organizational culture & HR issues (Current issues series) Includes bibliographical references. ISBN 0-88886-516-3 1. Personnel management. 2. Corporate culture. 3. Organizational change. 4. Consolidation and merger of corporations. I. Title. II. Series: Current issues series (Kingston, Ont.). HF5549.P469 1999 658.3 C99-932294-X Executive Summary Mergers and acquisitions are increasing in North America as organizations try to expand their operations and increase their competitive advantage. But despite optimistic expectations, mergers and acquisitions frequently fail, in part because managers neglect human resource issues, which are rarely considered until serious problems arise. This study highlights the importance of proactive management of human resource issues, concurrently with financial issues, and offers detailed practical advice to help ensure...
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