Business Acquisition Essay

It has been able to more than 11,500 stores in more than 28 countries worldwide. Its headquarters of the company is based in Bentonville, Arkansas. Walton family Company has most shares of the company as they own 52% of the total stock. The company has employed more than 2. 2 million workers globally and 1. The company has more than 1050 operating departmental stores across United States cities. Its headquarters is located in the Texas United States. The company is controlled by Marvin as the CEO and Mr. Mike as the chairman. It has also employed more than 114,000 employees in all its outlets. With more 114,000 employees it has more workforce which is crucial for the survival of the company. For the last three years, the company has experienced massive losses in its sales, with a considerable decline being witnessed in 2013.

Given that the company has experienced the downfall in its sales and lost, this makes it easy to bargain for its acquisition price with its management. The company has a revenue of $12. 527 billion this is vital because it will add more benefits to the growth of Wal-Mart’s revenue. There are different sources of cost synergies they include; there is a reduction in the handout, eradication of extra facilities, and a decrease of overheads and increase in bargaining with suppliers. Revenue synergy occurs when two merged companies can generate more sales than individual company resulting from the acquisition. It creates very eye-catching economies for both supplier and purchaser. There are different types of revenue synergy they include; sharing of distribution channels allows access to new ready markets, reduced production cost and high sales of complementary products.

Revenue synergy refers to the suppleness and simplicity in procedures which leads to cut production costs. It is estimated to be 20%, and in a real sense, the investing company cannot influence the processes of the investee's tasks extensively. This means the targeted company has more voting stock hence it will tend to own the investing company. The other applicable accounting technique is a consolidation of financial statements which occurs when the company ownership proceeds above 50% of the voting stock of the targeted organization. When using this method, only one set of budgeting statements are made. The equity method of accounting occurs when the acquiring company is capable of impacting the processes of the targeted or investee company. The third reason is if it happens that in the future there arises the need for capital, the company can get the capital by supplying shares for the minor company.

Approaches of evaluation of assets There are several methods of evaluating assets in an organization. The four common techniques applied are discounting cash flow analysis, comparable transactions methods, multiple methods, and market valuation. The proper valuing way in your case is the market valuation method. The market value of an asset is merely the prevailing prices currently in the marketplace. Therefore the risks of selling at a loss are avoided. Market value can drop or rise regarding the demand. The company will be in a position to regulate demand and therefore avoid decreasing market value of assets. To conclude this method of evaluating assets caters to fluctuations in market value. The business owners will be in a position manipulate to supply and demand to add value to their assets.