The paper "Possibility of Vibrant Limited Acquiring a Japanese Company Galaxy Pharma" is a great example of a business case study. The acquisition is a common term used to refer to the process that enables a company to acquire a stake in another company. In different cases, the company can acquire either part or whole of the stake so as to exercise control over the company. This is basically a growth strategy applied mainly by multinational companies. It is easier and more feasible acquiring an already existing business entity than starting a new operation (Jeffrey & Michael 2000, p.
210). This transaction can be either by cash or by equity. Vibrant Limited, in this case, is the one which is acquiring a stake in Galaxy Pharma. This is definitely an impressive move in relation to the overall growth strategy of the buying company. Nevertheless, it is important to consider a number of issues relating to this deal that the company intends to be involved in. Analysis Benefits Another aspect of the analysis of this company is the working capital. The company has working capital of Yen 30250 million with 40% of it being cash.
This is very liquid and this implies that the operations of the company will be easily necessitated. When Vibrant Limited takes over the management of this company, it will not struggle with handling operational activities. Because of this, the parties involved in the negotiations that lead to acquisitions are always keen to discuss the element of working capital upfront (Yusuf, Christopher & Ulrike 2008, p. 285). With good working capital, the acquirer, in this case, will find it easy to meet the pending obligations with either customers or creditors.
The financial performance of Galaxy Pharma is closely linked to the working capital. For instance, the previous year’ s income which stands at Yen 4551 million was driven by the working capital of the company. On the hand, the information on the company’ s income statement hints at good returns. The company recorded an income of Yen 4551 million during the previous financial year. This is quite impressive considering the value of assets that generated this income. From the information provided, less than Yen 40000 million is what gave forth 4551 million.
There is more potential that this business entity can exceed its productivity based on the strength of its balance sheet. The liquidity of the enterprise is a real pointer to productivity and better returns. The acquiring company simply requires putting strategies in place to ensure that after the acquisition, the performance does not slow down. The financial information provided indicates that there is a good possibility that Vibrant Ltd can break even within a relatively shorter period. This means that the company may actually afford to recover all its expenditures on acquisition within a considerably shorter period of time (Bai, Ramayya, Rema& Harry 2013, p.
740). The benefits that emanate from the company’ s decision to acquire another company from a different country can be lucrative. Since Vibrant Ltd is taking over an already established company, it enjoys a series of benefits. The company is allowed to use the brand name of the acquired entity in the new market (Bai, Ramayya, Rema& Harry 2013, p. 738). This can be very rewarding especially if the acquired company had a strong brand name in the market.
On the other hand, if the company’ s name had a bad reputation on the market, it may cost the acquiring company dearly to clean it. At the same time, since the company will be doing business in the same market, it is much easier to strategize on how to dominate the market. In the most foreign direct investment of this kind, it is the company enjoys privileges of sourcing materials. Similarly, the company will enjoy the technology that is exploited in a foreign country.
All these benefits are expected to be translated into financial gain for the company.
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