International Acquisitions

 Pre-Acquisitions Finance review Risk Management  Post-Acquisitions Project management approach  Integration Organizational and social approach

Stages of Finance Review  Selection of target  Valuation  The deal  Assessment the outcome  Managing the outcome

Methods in Finance Review  Dividend discount model  Asset-based valuation  Cash flow-based valuation  Accounting-based methods  Real options

Risk Management  Sources of risks Virtual Estimable Perceived directly  Measure and control approach

International Acquisitions  Pre-Acquisitions Finance review Risk Management  Post-Acquisitions Project management approach  Integration Organizational and social approach

Project Management Approach  Project team Acquirer creates a team for the purpose of performing integration  Project Risk Risk identification Risk quantification Risk response development Risk response control  Monitoring Project Progress Value drivers and measures

International Acquisitions  Pre-Acquisitions Finance review Risk Management  Post-Acquisitions Project management approach  Integration Organizational and social approach

Organization and Social Approach  To identify the sources of synergy  To create intrinsic value  To establish strategic planning  To keep management retention  To get union involvement  To promote corporate communication

Case Study : the IBM/Lenovo deal  Chinese company Lenovo Group Limited acquired IBM’s personal computer business in 2005 at the value of $1.75 billion  It signals the arrival of China as global player in key industries  Direct competition with Dell and HP in PC business

Lenovo’s Challenges  Management integration in new company  Retention of the customers

The Outcome  Offsetting IBM’s Weaknesses  Retention of IBM senior executives  Quick Management Integration

Discuss the following questions: What problems do IBM/Lenovo deal address? What issues and challenges do IBM/Lenovo deal present? What can be done to address these issues? What are the business issues that should be addressed when Lenovo acquire IBM PC business?