Landmark Facility Solutions Harvard Case Solution & Analysis

Landmark Facility Solutions Case Solution 

  1. Benefits associated with acquiring Landmark

In order to succeed extensively in the market, Landmark could be very beneficial for Broadway to acquire. It can provide Broadway with cheaper as well as faster way to improve the sales.Along. with this, it can help the company to expand by opening new branches. With the help of Broadway, the company could be able to achieve the economies of scale thereby contributing to minimizing the cost as well as increasing profits for the shareholders of the company. The acquisition can help Broadway in gaining a wide number of customers from all over the world.

With the help of this acquisition, Broadway would be able to enhance its technological aspects of the company by extending more energy and engineering solution which can help attract several new clients for the company which would ensure the increased market share in the east coast division. It would also help the company in the exposure towards new markets for major industries. The primary focus of the company to improve its services in its hometown could also be achieved with this acquisition which can ensure the long term goals of the company.

With this ability, Broadway would able to manage both the companies together. The prime problem in Landmark was the inefficiency in cutting the cost of the company which would be covered via this acquisition. The elimination of overheads can cause a huge positive effect to the ratio of net working capital of the company to its net sales. Moreover, it was also estimated that Broadway could increase its operations by 3% with the help of cutting the cost of the overall company.

Landmark is a strong brand for its expertise in high quality services and functionality of its management. Thisshows that Landmark is a reputable firm. The goal to achieve high operating profit margin can be achieved by Broadway by using the name of Landmark. Moreover, high premium prices can be set by management of Broadway to achieve this goal under the influence of brand name of Landmark.

Justification of Mr. Harris of $120 million for acquiring Landmark

In order to justify this bid, Mr. Harris is required to do some calculations in order tovalue Landmark in both optimistic as well as pessimistic scenarios.The Cost of Goods Sold is 90 % to its sales, which can be minimized by properly handling of cost-management department of Landmark.

The Optimistic scenario provides the enterprise value of approximately $153.05 million. The figures ensure that the company has the ability to payback with its initial investment. Similarly,by looking at the pessimistic approach by the management the enterprise value is$100.67 million which showsthe viable opportunity for Broadway to acquire this new company.

This overall calculation concludes the fact that the company by acquiring Landmark would be able to increase market share as well as its market presence in the major parts of the world.Moreover, it will grow with the help of diversification, portfolio of services, pool of clients, revenues and profit margin.

  1. 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 available with Mr. Harris

Broadway has two alternative solutions available that are either financing it completely with the debt and no equity or Mr. Harris could finance it with 50% of debt as well as 50% equity. Mr. Harris assigned his employees to help him evaluate the two alternatives of financing in the optimistic as well as pessimistic approach. The total financing required by the company to acquire Landmark is $120 million......

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