Landmark Facility Solutions Harvard Case Solution & Analysis

Landmark Facility Case  Solutions

Introduction

Broadway Industries, Inc.

In 2013, associations in the United States burned through $120 billion on office administration. An office chief gave far reaching office administrations, which included janitorial arrangements, HVAC, business cleaning, office designing, vitality arrangements, finishing, stopping, and security, through stand-alone or incorporated arrangements. The business involved a couple of extensive incorporated organizations and few private players with particular industry or local mastery, and was very divided and focused. This environment spoke to an open door for huge organizations that worked in numerous business sectors. These organizations started to expand their administrations by offering packaged or coordinated administrations to customers

Landmark Facility Solutions

Historic point Facility Solutions was established in 1956 as a provincial janitorial administrations supplier to business offices in the Sacramento territory. It expanded rapidly throughout the following three decades. By the late 2000s, it had turned into a substantial coordinated supplier to business clients. It represented considerable authority in building designing and vitality arrangements, janitorial and business cleaning, and other general building upkeep and administration. It overhauled corporate grounds, central station, and research offices for organizations in the pharmaceutical, medicinal, innovative, and shopper items segments.

A) Does Broadway benefit from acquiring Landmark?  How can Harris justify $120 million bid for Landmark?

It is expected that both the companies will benefit greatly from this acquisition. One of the benefits of this acquisition is that both companies will eliminate their overhead expense, such as corporate headquarters, executives, support staff, and redundant office space. Broadway could get many benefits from this acquisition such as it can increase its sales as well as it will be able to reduce its cost and able to increase the profit through gaining more customers.

It is expected thatthe company’s gross profit will also be increased. Ifthe acquisition takes place then thecompany can easily improve its services as well as it can improve itstechnology. It is also expected that it was estimated that Broadway could increase its operations by 3% with the help of cutting the cost of the overall company.

The acquisition could help Broadway to gain market share in these segments in the eastern United States. . Therefore, acquiring Landmark would facilitate this goal.

$120 million for acquiring Landmark

The Optimistic scenario provides the enterprise value of approximately $143.40805 Million. This figure show that the company is able to pay back its investment since as per the pessimistic approach the value is $79.16 and this value shows that this is the best opportunity to acquire the company.

B)If Harris were to proceed with the acquisition, which financing alternative should be chosen and why?  Would Broadway be capable of servicing its debt after the acquisition?

Alternatives

There are two alternatives available 100% debt financing and half is for debt and half is for equity, which means 50% of debt as well as 50% of equity. Moreover, the company has two financing options for the acquisition;one optionis 100% debt financing and the other option is to finance half for debt and half for equity, which indicates 50 % is for debt and 50% is for equity. Mr. Harris assigned his task to evaluate the two alternatives of financing in the optimistic and pessimistic approach.

If we use first alternative, then in that case if the company will not generate profit in the feature therefore, this will have a significant impact on the company as well as the company can have a serious impact on the reliability of the loans which will be risky in the future..................

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