Corporate Finance Case Study
1- In a few phrases, describe the situation of the Roberto and Chez Léon chain.
2- Without the Chez Léon chain, would you think that the Roberto chain has a positive, nil or negative value?
3- What are the foundations of value for Chez Léon?
4- Given the objectives of the Italian State, would you recommend that the sale be completed: a. On an open bid basis? b. Via a private negotiation, selecting the most obvious candidates? Why?
5- Once you have selected the procedure, is it necessary to set a minimum price for the Roberto group below which, to safeguard the interests of the Italian State, it will not sell its stake in the group? Why?
6- Would you …show more content…
Given the objectives of the Italian State, would you recommend that the sale be completed: * On an open bid bases? * Via a private negotiation, selecting the most obvious candidate?Why? An interesting result of a first price auction model with incomplete information is obtained. Under a specific condition, an increase in the number of bidders increases the equilibrium expected information, acquisition, expenditures of all bidders and decreases the expected bid revenue to a seller. Competition among bidders in the form of entry and private information acquisition is not profitable to a seller.
At some point during this phase, senior managers of both parties will need to meet and develop the basis for a working relationship. This will include:
* Confidentiality agreements * Preliminary disclosure information (help to ascertain strategic fit, business performance and potential synergies) * Memorandum (timetable, rules of engagement, bid procedure) * Financial results and projections * Initial indication of interest (non-binding bid, initial due diligence,availability of funds, conditions to closing).
Deal Execution - The next stage is the negotiation of the deal. Negotiation of a definitive agreement can be time consuming. The acquiring business will need to bring together a mix of experiences and backgrounds into the deal team, including: *