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Commercial Logic of Acquiring Mandrake Footwear
Finance & Accounting
Pages 11 (2761 words)
INTERNATIONAL FINANCE AND DECISION MAKING Commercial Logic of Acquiring Mandrake Footwear The decision to make acquisitions is taken by several companies in many parts of the world every now and then. Some of these decisions eventually proof to be vital and profitable while others turn out to be wrong decisions because they result in losses (Olsson, 2001).
If signals from the evaluation turn out to be bright, then the acquisition could probably be beneficial. In the case of Gear Active acquiring Mandrake Footwear, there are four major themes that can be used in evaluating the commercial logic and viability of the acquisition. These are briefly explained below. Ready Market with existing Customer Base Commercially, an acquisition such as the one Gear Active is seeking to undertake comes with the position whereby the acquirer has at his disposal, the ready market that the existing company had. They also have access to the existing customers of the companies that they acquired. This is an important commercial value that purchasers can build on as competitive advantages (Roy, 1999). To Gear Active therefore, there is this major advantage in acquiring Mandrake Footwear. Already, Mandrake Footwear has been identified as a major competitor in the footwear industry. The company is also seemingly larger than Gear Active. This means that Mandrake has created a very huge market base that Gear Active would only need to build on. The acquisition would therefore be an opportunity for Gear Active to record massive expansion over a very short period of time. ...
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