The following page summarizes a situation where a small company is being acquire
ID: 456305 • Letter: T
Question
The following page summarizes a situation where a small company is being acquired by a much larger company. You have been appointed the business integration manager of the acquiring company, and it is your job to manage the change process by which the target company is assimilated into the acquiring company.
Acquiring Company
Target Company
$2 billion + revenue
$50 million revenue
Diversified children’s publishing and media company. Largest division ($1.3 billion) is driving, and will manage, the acquisition.
Creator of books sold in integrated package with items relating to books content (juggling balls, game pieces, decorative items, etc.
Global distribution network
North American distribution
10,000 employees worldwide
50 employees, all in one office
New York based headquarters
Northern California offices
Publicly traded company with standard reporting requirements
Private company previously owned by 3 founders, one of whom is remaining with company
Employee-centered culture. Non-confrontational environment. Prone to large, long, and frequent meetings.
Loose, artsy, creative culture where employees have control of their time and agendas.
Very pleasant office space with open areas and ample meeting rooms.
Funky, artsy work space where creativity flows and pets roam free.
Dominates elementary and high school distribution channels via book clubs and book fairs.
No distribution to school markets.
Well-defined structures and systems.
Loosely defined systems, but company has been successful using them.
Division President with 13-year tenure. Well-respected in industry. Known for even-handedness and superior editorial judgment. Relies heavily on key people for business decisions.
New President with less than 1-year tenure. Product of dotcom boom/bust. Good people and management skills. Needs to carefully “manage” remaining founder.
State two ways in which the acquiring company could expand the target company’s revenues to create a more valuable target company
Acquiring Company
Target Company
$2 billion + revenue
$50 million revenue
Diversified children’s publishing and media company. Largest division ($1.3 billion) is driving, and will manage, the acquisition.
Creator of books sold in integrated package with items relating to books content (juggling balls, game pieces, decorative items, etc.
Global distribution network
North American distribution
10,000 employees worldwide
50 employees, all in one office
New York based headquarters
Northern California offices
Publicly traded company with standard reporting requirements
Private company previously owned by 3 founders, one of whom is remaining with company
Employee-centered culture. Non-confrontational environment. Prone to large, long, and frequent meetings.
Loose, artsy, creative culture where employees have control of their time and agendas.
Very pleasant office space with open areas and ample meeting rooms.
Funky, artsy work space where creativity flows and pets roam free.
Dominates elementary and high school distribution channels via book clubs and book fairs.
No distribution to school markets.
Well-defined structures and systems.
Loosely defined systems, but company has been successful using them.
Division President with 13-year tenure. Well-respected in industry. Known for even-handedness and superior editorial judgment. Relies heavily on key people for business decisions.
New President with less than 1-year tenure. Product of dotcom boom/bust. Good people and management skills. Needs to carefully “manage” remaining founder.
Explanation / Answer
The two ways in which the acquiring company could expand the target company’s revenues to create a more valuable target company are as follows:
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