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Monmouth’s Inc. Case Solution & Answer

Monmouth’s Inc. Case Solution 

Executive Summary

The Monmouth’s organization needs to be expanded and growing program to add diversification in the business; Robertson Tool Company was considered the largest firm which had the capabilities of qualitative and quantitative to enhance the Monmouth value. According to the previous report, the company approached Monmouth but the proposal was not accepted because of some obstacles of organization and the shareholders situation of equity. The organization has again enforced the target of acquisition. The main hurdle is the Robertson’s Company’s value and the shareholders equity amount in order to take the control of the organization by the Monmouth.

The takeover of the Robertson will enhance Monmouth’s strategic goals as it wants to mitigate the constraint which has concerned the cyclical nature of the business with uneven revenue figures. This will provide the differentiation it seeks, as Robertson will acquire numerous product details with the main products of the company with 50% market share for Clamps and Vises, and 9% market share of the $ 200 Million market of scissors and other accessories. Further, the organization will have synergistic benefits as the reduction of Cost of Goods sold to 65%, administration and selling expense decrease, and higher return increasing the Key performance indicators of the organization as a whole.

The takeover by the Robert will make the strategic objectives of Monmouth because it needs to overcome and mitigate aspects which have the nature of clinical with odd figures of revenue.That would give the dissimilarities, as Robertson will take various product information with the primary products of the firm with the market share of 50% for Clamps and Vises, and 9% market share of the $ 200 Million market of scissors and other accessories.

The quantitative area of the study,areas which are taken to be analyzed by taking Cash flow Discount method, Market Multiples Approach, and other financial study required in these circumstances.

The discounted Cash flow is done by the WACC, which has been figured out by the provided data which calculates the WACC about 5.01%. (See exhibit 1).The discounted Cash flow method gives the value of organization at $ 10.21 Million except the final value and $ 125.87 Million with final value. This provides to the price of share of $ 17.49 and $ 215.52 respectively. For DCF (See exhibit 2)

On the contrary, other method is used to calculate the price of share for the company by the Earnings before Interest after Tax (EBIAT) Multiple, this is calculated by the industry average and gives a Net  price of share of the company at $ 20.49 / share, (see exhibit 3), of this analysis report of staff. The EBIAT Multiple is a market derived which is classified in the company according to the higher areas of industry of the market.

Statement of the problem

The Monmouth’s organization required to be enhanced and growing stage include diversification in the business; Robertson Tool Company was believed to be the largest firm which had the capabilities of qualitative and quantitative to enhance the Monmouth value. According to the previous report, the company approached Monmouth but the proposal was not accepted because of some obstacles of organization and the shareholders situation of equity. The organization has again enforced the target of acquisition. The main hurdle is the Robertson’s Company’s value and the shareholders equity amount in order to take the control of the organization by the Monmouth.

Moreover, the other issue which is derived from the files of data is subsequent benefits of integration that is achieved by the takeover of Robertson by Monmouth Organization.The main concern is the subsequent factor of risk and rewards of ownership of the Robertson stock, and the applicable form to provide the facility of the acquisition of Robertson Tool Company…………………………..

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