Risk Analysis on Investment Decision

University of Phoenix te Arts, combine (SAI) manufactures digital visualize Integrated Circuits (IC) that be usage in various electronic equipment (University of Phoenix Simulation, 2008). The community?s initial startup occurred during the pass with flying colors of the semiconductor business, but the evaluate revenues in conclusion decreased by 40% (University of Phoenix Simulation, 2008). SAI survived by raw approachs and freeze groovy expenses. Currently, SAI?s Chairman, Hal Eichner, wants to clothe in a puke that leave alone increased the company?s foodstuff contribution and keep ace with rising engineering (University of Phoenix Simulation, 2008). SAI has deuce different opportunities to maximize sh arholders wealth. te Arts, Incorporated (SAI) has to analyze whether it would advance the company a emulous service to don W-Comm. The cognition would be considered an external enthronisation strategy. match to Ross, Westerfield and Jaffe (2005), there are three legal ways to acquire a square 1) merger or consolidation, 2) acquisition of stock, and 3) acquisition of assets ( equating. 797). The acquisition of W-Comm would be a merger that will be incorporated into Silicon Arts as a intricate acquisition because they are non-related industries (Ross et al, 2005, par. 797).

The acquisition of W-Comm gives the company a competitive advantage of go into the wireless communication market, revenue enhancement, market gain, cost reduction, tax gains, and reduction in the cost of capital (Ross et al 2005, par 802-806). However, there are disadvantages in acquisition through a merger. The conglomerate acquisition of W-Comm has the adventure of SIA producing lacklustre financial carrying into action due to the lack of expertise and familiarity of the industry. The shareholders stock may be reduced. According to Ross et al (2005), ? ? 2 firms merge, the variability of their combined value is usually less than would be true if the firms remained separate entities ? shareholders are likely to be worsened off [because]... If you want to pass water a full essay, channel it on our website: Orderessay

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