Buyer’s Remorse: GM’s Alliance with Fiat Harvard Case Solution & Analysis

Rick Wagoner of GM was impatient on February 2nd 2005. Fiat threatened GM that it would use its alternative due to a deal between both parties in 2000. Neither party had really considered it would ever be exercised, although the put option was included in the Master Agreement. GM’s fortunes as well as Fiat’s had transformed radically—mostly for the worse however—in the previous half of a decade. Rick Wagoner had to have a meeting with Fiat’s head on February 13 in order to converse on closing conditions. This is one of the more outrageous stories in recent years of tactical merges that could go haywire. This case sheds light on a crucial factor of the Master Agreement, of which Fiat and General Motors are parties—the put option—eventually resulted in the destruction of an extremely successful series of joint ventures between both of these large automakers.

The put option deal embedded within the agreement, the pivotal component, resulted in GM consenting to provide Fiat $2 billion within the due stated time to thus nullify this merger. This case overlooks and thus, raises concerns related to the proficient in due diligence arrangement of both the firms, real building of understanding itself, and the unfortunate series of events which resulted in Fiat leveraging the set put to take out a big exit payment from General Motors.Sooner or later, the case may also be used to question what the value of an acquisition is to an acquirer, for instance, related duties and accountability related to an existing running company.

Publication Date: 11/15/2011

This is just an excerpt. This case is about Finance

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