The paper "The Letter of Transmittal - Vibrant Ltd Acquisitions" is an outstanding example of a business case study. The letter of transmittal is in relation to Vibrant Ltd acquisitions. It is also for the purposes of providing advice with regards to the risk that may be encountered as a result of the acquisition. Financial risks may occur in the course of carrying out operations as the company will be required to make several changes. Motivating and maintaining the existing staff may be a complicated process for the company and hence leading to risk.
Operational risk may also be encountered as the company will be operating in a new environment. Unforeseen risk like earthquakes may also damage the infrastructure of the company. Management conflict risk is likely due to the cultural diversity in Japan and Canada. It is recommended that the company should seek legal advice with regards to the terms of the acquisition. It is also recommended that the company should carry out training with regards to cultural diversity. An insurance policy is also a must for the company. LETTER OF TRANSMITTAL RE: VIBRANT LTD ACQUISITION This transmittal letter is sent to you in relation to the announced acquisition of Galaxy Pharma by Vibrant Ltd at a cost of Yen 102,000 million to be paid in cash.
All the relevant information with regards to the acquisition must be filled and certified for the transaction to be completed. This letter of transmittal is aimed at advising you on the types of potential risks that may occur after the acquisition. Please feel free to contact me for any information or clarification with regards to the risks identified. Sincerely Potential types of risks The acquisition is likely to face various types of risks considering that the company is Canadian while the company being acquired is based in Japan.
Financial risks are likely to occur as the acquisition amount is too high and it is more than double the total worth of the company. Due to the changes in ownership of the company, the customers may be affected as they may not trust the new owners and hence. The reduction in the number of customers exposes the company to financial risk as it may end up making losses.
The company may fail to generate a return on an investment after the acquisition. This is considering that the acquisition amount is too high and the company had an operating income of Yen 4, 551million in the previous year. This is an indication that a drop in profitability will have a negative impact on the ability of the company to recover the amount that was spent during the acquisition. A risk of unanticipated costs also exists and this may impact negatively on the financial ability of the company.
The unanticipated costs may be encountered during the operations and implementations of the strategic plans of the company under new management (Ravenscraft, & Scherer, 2011). On the other hand, the projected sales may not be attained by the company. The failure of the company to attain its goals and objectives in terms of sales may lead to losses for the company and hence exposing it to financial risks.