Nantucket Nectar's Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Nantucket Nectar's Case Solution

Each of the potential acquirers bring their rationale and justification of buying Nantucket Nectars such as; presenting the cultural fit, high growth potential by combining operations of two companies, high market share and strategic reasons such as increased synergy, new niche offerings, cost reduction, economies of scale and competitive advantage. Each of the potential acquirers is interested in buying potential acquirers-Nantucket Nectar's based on the value of brand and strong market image.

How should they undertake the sale? Should they solicit one or two bids?

The acquirers of Nantucket Nectars could exploit the opportunity of soliciting one of two bids and involve in competitive bidding process because of the reason that the competitive bidding process would lead to various advantages such as negotiating strength, predictability, safety, maximized business valuation and effective governance. Furthermore, the acquires could undertake the sale by getting involve in public bidding as it would help company in determining the market value and leads to highest possible price of company. By soliciting-more than one bid would increase the chances of the wining because of the reason that in competitive bidding, each and every acquire would be able to get the best price as well as contract terms for their proposals and revise the offer price based other acquirer’s offering price.

How should the deal be structured? Stock? Cash? Vesting? Performance milestones?

The right buyer of Nantucket Nectars purchase significant interest in the company by purchasing stock because of the reason that if Tom First and Tom Scott would demand for the cash deal without long term management responsibility, they would not be able to leverage from the strengths of the acquiring company. Furthermore, the main benefits of stock financing is that there would be no obligation to repay the money acquired through it. Also, it would place no financial burden on the company. From the buyer’s perspective, by investing in shares of the company, the buying company would be able to enjoy various benefits such as wealth creation, combating risk, gaining competitive advantage, added benefits of dividends, minimizing cost and so forth. The acquirer of the company does not need to bother with re-titles of individual assets and costly revaluation. The buyer is able to avoid to pay transfer taxes. On the other hand, structuring deal through stock would also help target company remain intact but with new ownership, expertise and management(Sirower, 2015).

Should they engage an investment bank in the sale? Which one?

The company and the acquirer must engage the investment bank in the sale because of the reason that the ultimate objective of the investment bank is to establish fair value for the companies involved in the transaction. Additionally, the investment banks also source deals by approaching companies with their own strategic ideas as well as studying the market themselves. Furthermore, the investment bank would be responsible for deploying the knowledge& understanding of the client and its industry in order to craft a set of key points that form a compelling investment thesis—then assembling marketing materials such as the "Information Memorandum" to convey these points. Also, the investment bank would identify and contract the potential buyers, manage the flow of information and hold strategic discussion with the interested parties. Not only this, the investment bank would help Nantucket Establishing a formal process of bid, reviewing bids and helping select a right buyer.Moreover, the investment bank would also help negotiate the final terms of the acquisition deal.

On the buy-side engagement, the responsibilities of the investment bank includes assess and evaluate the potential target as well as its industry to set a preliminary valuation, assessing the strategic fit of a target with the client, identify& quantifying opportunities of synergy, craft a bidding strategy as well as helping draft proposed purchase’s terms, identify potential problems in the process of diligence& following up accordingly and analyze the capital structure of buyer to determine the correct transaction financing. Tom First and Tom Scott are recommended to engage the investment bank from Boston due to the fact that Boston is amongst the top five New Age beverage markets in the US. Also, by choosing the investment bank from Boston, they ensure that the bank would bring them the greatest value in a transaction because the company enjoys strong market reputation and brand equity in Boston......................

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