...Hertz Ipo Case Analysis Executive Summary Hertz group had initiated an IPO in July 2006 when Carlyle group, together with Clayton, Dubilier &Rice, and Merril Lynch Global Private equity , three prominent firms had filed to take the firm public. However this action has come just seven months after the three had combined to purchase Hertz from Ford Motor Company for Approx. $15 million. Berg, MD of Vandelay Capital Management debated whether to invest in this IPO.The LBO sponsors had borrowed an additional $1 billion on top of the buyout financing to pay themselves a special dividend in June 2006 , being the biggest reason why the IPO generated widespread criticism along with the speed with which the IPO was conducted . In the face of this criticism, the demand for the Hertz IPO weakened, and the offer price was reduced from the initial file price range of $16-$18 to just $15. Berg must assess whether at $15 per share, Hertz offers an attractive investment for this fund. After detailed analysis on the sponsors' returns on their investment and the attractiveness of the $15 offer price to public shareholders, along with the circumstances surrounding the IPO, it was concluded and advised not to invest. Reasons behind the IPO One of the obvious reasons behind the IPO was Hertz’s strong brand equity that gave it strong pricing power since it was ranked as the top worldwide general use car rental brand and one of the largest rental companies in the U.S and Canadian markets...
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...Bidding on Hertz LBO case study The main issue of the case is that The Carlyle Group and its partners (Clayton, Dubilier & Rice, and Merrill Lynch Global Private Equity) must make a decision about the final terms of a bid to purchase the Hertz Corporation, a wholly owned subsidiary of The Ford Motor Company. Hertz had been put up for sale in June 2005. In order to initiate “consideration of strategic alternatives” Ford entered a dual-track process, which means pursuing an initial public offering and a private auction process simultaneously. A dual-track process gives several advantages to a Ford, a seller of Hertz, by affecting the bidding process: 1) a dual-track approach can maximize the price obtained by the seller because of competitive pressure of a viable IPO process that can drive bidders to put more money on the table; 2) a dual-track process can give a seller significant negotiating leverage over deal terms in a private sale; 3) a dual-track approach allows a seller to keep its options open until it becomes clear which route will yield the highest value, thus preserving flexibility and hedging against deal uncertainty; 4) while a dual-track approach magnifies the cost, complexity and management distraction inherent in any sale process, it may also enjoy useful synergies by providing to a seller a comparable information about value of the selling company. The seller can judge about fair ask price of its company based on due diligence of bidders...
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...by a put option. Roughly 85 % of Hertz’ domestic fleet and 74 % of its international fleet were program cars. Program cars will become more expensive in the future due to the fact that Ford and GM adopted new market strategies that deemphasized lower-margin sales of program cars Risk cars exposed the company to residual value risk. Generally less expensive than program cars. What could be the possible motivations for CD&R to buy (syndicated) Hertz? • Under exploiting of the firm’s potential due to mismanagement. Hertz managers were overconfident. The senior guys were absolutely convinced that they were running the most efficient, most productive, well-organized, well-oiled machine in the industry. • The room for increasing the operational efficiency. Value creation through cost savings. • Potential improvement of the capital structure. Lower cost of capital through extensive securitization. • Hertz was undervalued. • Unique strong brand • On airport market leadership • Good historical performance Operational Efficiency Improvements • U.S. RAC on airport operating expenses CD&R estimated that labor per transaction, administrative, and other costs had increased 41 %, 65 % and 30 %. • U.S. RAC off-airport strategy CD&R proposed to slow expansion, focus selectively on profitable growth, and close locations that failed to achieve positive contribution. • European operating SG&A expenses Hertz’ operational SG&A expenses as a...
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...Finance 423 Spring 2014 T TH Financial Analysis and Management Dr. Kamal M. Haddad COURSE OBJECTIVES Fin 423 is designed to develop critical thinking at the individual level, and problem solving competencies at both the individual and group levels. Teamwork and group problem solving are stressed. The course provides a thorough overview of financial analysis, including relevant modern theory and practical applications. Topics include financial statement analysis, financial planning, principles of valuation, capital budgeting, capital structure, and issues in financial policy. The course gives students opportunities to apply financial theory to analyze real life situations in an uncertain environment with an incomplete data set. It is integrative in nature, with special attention to the integration of theory and managerial judgment in the process of making financial decisions. BSBA Goals BSBA students will graduate being Effective Communicators, Critical Thinkers, Able to Analyze Ethical Problems, Global in their perspective, and Knowledgeable about the essentials of business. This class contributes to those goals through its student learning outcomes. LEARNING OBJECTIVES * Use Financial Statements to evaluate firm performance. * Project Financial Statements (B/S, I/S, budgets,...
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...operations, from investing, and from financing. The total of operating, investing, and financing cash flows equals the change in cash, through an algebraic identity. Χ Cash flow from operations is cash collected from the sales of goods and services and from investments (e.g., interest and dividends), less cash spent for operating expenses. These include cash paid to suppliers, employees, interest, tax, and other miscellaneous operating expenses. The term operating cash flow is a net concept. Χ Cash flow from investing is cash spend on investments such as marketable securities, investments, PP&E, land, and patents, less cash received from the sales of these types of investments. The term investing cash flow is a net concept. In most cases, investing cash flow is negative. Χ Cash flow from financing is cash generated from the issuance of debt and the sale of stock, less cash spent for dividends, debt repayment, and the purchase of stock. Again, the term financing cash flow is a net concept. Χ In a sense, the objective of any business is to generate negative cash flows from financing, which represents the payback for equity and debt financiers. Any investment made in the company is done with the expectation that one day, the firm will be able to internally support substantial amounts of negative financing cash flows. Χ Non-cash transactions do not affect the cash flow statement. For example, if a firm acquires equipment through the issuance of a note payable, the...
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...Singapore Press Holding A Case Study GROUP 6 Special Group Project S P Jain Center of Management Singapore Amit Ambardekar Apoorv Babel GMBA07F261 GMBA07F278 Manu Gupta Parul Nagpal GMBA07D169 GMBA07D240 Preface S P Jain Center of Management has the academic support of Bharatiya Vidya Bhavan's. S P Jain Institute of Management & Research, Mumbai is ranked among the Top Ten Business Schools in Asia and India. In order to replicate its success and achievements in management education in the global arena, S P Jain decided to established centers of excellence in different parts of the world. The first international campus of S P Jain was established at the prestigious Knowledge Village in Dubai in the year 2004. and the 2nd international campus in the city of Singapore. Global MBA program of the S P Jain Center of Management is designed to train individuals to work in the new global economy. With over 900 teaching hours, the course is equal to most two-year MBA programs. The program is conducted jointly at S P Jain’s Dubai and Singapore campuses. As a part of the curriculum, students are required to do a “Special Group Project” based mainly on the Industry Research. We, for this, have taken up a project on Singapore Press Holdings. The project is a case study which looks into: a). History of SPH b). SPH foray into internet - AsiaOne c). AsiaOne, Journey d). ST...
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...General Motors Co Strategic and Financial Analysis ADVANCED CORPORATE FINANCE April 22, 2012 Authored by: Ana Romero, Roshan Picardo, Carlos Castro, Shikhar Agarwal 0 General Motors Co Strategic and Financial Analysis Executive Summary This report provides an evaluation of strategic and financial evolution of General Motors Company (GM) in the last ten years. Events like the global economic recession lead to a deep restructuring of the firm, filling for bankruptcy and a government bailout. The report provides an analysis of GM’s business model, products, the markets it is competing in, the global automotive and manufacturing industry and it also assess its attractiveness for incumbents and new entrants is also With a brief history of GM we evaluate its reaction to the global recession. We compare their business model before, during and after the recession, comprising the strategic and financial implications of their restructuring plan. We provide results from this restructuring, including improvements in GM’s financial ratios like ROA (from 0.05 in 2010 to 0.07 in 2011) and ROE (from 0.23 in 2010 to 0.25 in 2011). While the recession significantly affected GM, it also affected the rest of the automobile industry, including their American competitor Ford Motors. We compare the main differences between these two important companies and analyze the way they reacted to the recession. We also observe the approach that Ford has taken to recovery, in terms of governance...
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...A Blueprint for Corporate Governance Fred R. Kaen AMACOM AMERICAN MANAGEMENT ASSOCIATION A Blueprint for Corporate Governance This Page Intentionally Left Blank A Blueprint for Corporate Governance Strategy, Accountability, and the Preservation of Shareholder Value Fred R. Kaen American Management Association New York • Atlanta • Brussels • Buenos Aires • Chicago • London • Mexico City San Francisco • Shanghai • Tokyo • Toronto • Washington, D. C. Special discounts on bulk quantities of AMACOM books are available to corporations, professional associations, and other organizations. For details, contact Special Sales Department, AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019. Tel.: 212-903-8316. Fax: 212-903-8083. Web site: www.amacombooks.org This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Library of Congress Cataloging-in-Publication Data Kaen, Fred R. A blueprint for corporate governance : strategy, accountability, and the preservation of shareholder value / Fred R. Kaen. p. cm. Includes bibliographical references and index. ISBN 0-8144-0586-X 1. Corporate governance. 2. Corporate governance—United...
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...tly A sk ed Fr equen in s Question orporate C FinanCe io, a llocch ur izio D uiry, M a lv i Pa sc a l Q tonio Sa Le Fur , A n Ya nn From the team behind Pierre Vernimmen’s % = Corporate FinanCe + 3 Frequently Asked Questions in Corporate Finance Frequently Asked Questions in Corporate Finance Pierre Vernimmen, Pascal Quiry, Antonio Salvi, Maurizio Dallocchio and Yann LeFur A John Wiley & Sons, Ltd., Publication This edition first published in 2011 Copyright 2011 Pierre Vernimmen Registered office John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom For details of our global editorial offices, for customer services and for information about how to apply for permission to reuse the copyright material in this book please see our website at www.wiley.com The rights of Pierre Vernimmen, Pascal Quiry, Antonio Salvi, Maurizio Dallocchio and Yann LeFur to be identified as the authors of this work have been asserted in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior permission of the publisher. Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with...
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...AUTOMOTIVE INDUSTRY ANALYSIS Submitted by Team A Donald Bradley Morgan Bruns Adam Fleming Jay Ling Lauren Margolin Felipe Roman Presented to: Prof. Alan Flury December 5, 2005 ME 6753: Principles of Management for Engineers Executive Summary Chosen industry: This analysis focuses on the automotive industry, specifically, large-scale manufacturers of automobiles. The automotive industry is inherently interesting: it is massive, it is competitive, and it is expected to undergo major restructuring in the near future due to globalization and decreasing oil reserves. The analysis team members (we) feel qualified to perform this investigation due to our familiarity with the industry and our education—several of us have studied and worked on problems associated with automobile manufacturing and we are all mechanical engineering graduate students. Analysis Methodology: The report begins with a historical overview of the automotive industry. This is followed by an analysis of the industry’s structural characteristics using Porter’s 5 Forces Model as a framework, which provides an understanding of the automotive industry as a whole in its current state. Next, ten representative companies of varying sizes are analyzed and compared; the chosen companies and selection criteria follow. General Motors, Ford, and Toyota were chosen because they are the current market leaders. DaimlerChrysler, Nissan, Volkswagen, and Honda were chosen because of their status as stable international...
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...BU Basic M.B.A. International Master of Business Administration |Index | Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Business Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Entrepreneurship. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 Marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 Statistics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 Strategic Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...
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...AFTER READING THIS CHAPTER, YOU SHOULD BE ABLE TO: 1 Differentiate between invention, innovation, and technological diffusion. 2 Explain how entrepreneurs and other innovators further technological advance. 3 Summarize how a firm determines its optimal amount of research and development (R&D). 4 Relate why firms can benefit from their innovation even though rivals have an incentive to imitate it. 5 Discuss the role of market structure in promoting technological advance. 6 Show how technological advance enhances productive efficiency and allocative efficiency. 11 WEB www.mcconnell19e.com 11W-1 Technology, R&D, and Efficiency • “Just do it!” In 1968 two entrepreneurs from Oregon developed a lightweight sport shoe and formed a new company called Nike, incorporating a “swoosh” logo (designed by a graduate student for $35). Today, Nike sells $18 billion worth of goods annually. • “Leap Ahead.” In 1967 neither Intel nor its product existed. Today it is the world’s largest producer of microprocessors for personal computers, with about $35 billion of annual sales. • “Save money, live better.” Expanding from a single store in 1962 to about 7000 stores worldwide today, Walmart’s annual revenue ($400 billion) exceeds that of General Motors or IBM. Nike, Intel, and Walmart owe much of their success to technological advance, broadly defined as new and better goods and services or new and better ways of producing or distributing them. Nike Bonus Web Chapter and Intel pioneered...
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...the Framework and Communicating the Value Proposition Building Customer Relationships Characteristics of Successful Brands Conclusion 1 BUILDING SUCCESSFUL BRANDS ON THE INTERNET CHAPTER 4 4.1 4.2 4.3 4.4 4.5 4.6 THE INTERNET 33 34 34 35 35 39 40 43 Introduction Overview of the Internet 4.2.1 The Defining Characteristics of the Internet The Growth of the Internet The Internet & e-Commerce The Impact of the Internet on Business Conclusion CHAPTER 5 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 BUILDING BRANDS ON THE INTERNET 44 45 45 47 48 50 51 52 57 59 60 Introduction The New Dynamics of Brands The Importance of Customer Loyalty Online Increasing Returns Economics and First-Mover Advantage Viral Marketing 5.5.1 The Case of Hotmail.com The Online Experience & The 7Cs Framework The Interactive...
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...thomas a . meyer How Great companies Get Started in terrible times Innovate! Innovate! How Great Companies Get Started in Terrible Times THOMAS A. MEYER John Wiley & Sons, Inc. Copyright © 2010 by Thomas A. Meyer. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose...
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...Creating a Customer-Centered Organization A Harvard Business Review Insight Center Report sponsored by The HBR Insight Center is an interactive resource that highlights the emerging thinking around today’s most important issues. In this installment of the series, Harvard Business Review focused on how managers are turning their companies into customer-focused organizations. The growing obsession with customer excellence is driven, in part, by technology. Today customers can obtain and exchange more information about the good and bad of their encounters with companies than ever before. That gives companies a great incentive to work harder to make customers happy — before, during, and after their purchases. © 2011 Harvard Business School Publishing. All rights reserved. Harvard Business Publishing is an affiliate of Harvard Business School. Creating a CustomerCentered Organization A Harvard Business Review Insight Center Report CONTENTS 1 3 5 7 9 11 13 15 17 19 21 23 Create Brand Superfans Matthew Rhoden How Philips Uses Net Promoter Scores to Understand Customers Suhail Khan What Zipcar Can Teach the S&P 500 Stephen Wunker How Fidelity Used Design Thinking to Perfect Its Website Frederick S. Leichter The Coming Point-of-Sale Revolution Grant McCracken Using Mobile Phones to Capture Customer Experiences Emma Macdonald, Hugh Wilson, and Umut Konus How to Play Marco Polo When Setting Prices Rafi Mohammed Beyond Mass Customization B. Joseph Pine II Understand...
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