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Commercial Logic of Acquiring Mandrake Footwear - Coursework Example

High school
Author : matilde20
Coursework
Finance & Accounting
Pages 9 (2259 words)
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Summary

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)…

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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). Fundamentally, the prediction as to whether or not a particular acquisition would be beneficial depends on a number of factors. Among other things, it should be possible to evaluate the commercial logic of the intended acquisition (Patra, Khatik, & Kolhe, 2003). 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. ...
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