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Winfield Refuse Management Inc Case Solution & Answer

Winfield Refuse Management Inc Case Solution

Introduction

This case discusses the Winfield Refuse company, as it is planning to acquire the Mott-Pliese Integrated Solution, because Winfield has evaluated that the acquisition would allow the company to achieve the economies of scale and ill help in reducing the company’s cost. Along with that, the company is now focusing on changing the business’s financing strategy, because previously the company did not prefer long term debt. Winfield Refuse was founded by Thomas Winfield in 1972. The company grew throughout its life,through strategic acquisitions and organic growth. The company is providing its services to about half a million customers in nine states, including: industrial, commercial and residential customers. Since its inception, the company is a family business with most of its board  members of being the family members. However, after 1980s; the external professionals became a part of the company’s management. Currently, the company’s CEO: Leo Staumpe is leading the major affairs of the company’s operations.

It has been the company’s policy from its initiation to use the equity funds to finance all its operations, avoiding the long-term debts and interest bearing debts. The company was having steady cash flow, which it had achieved through short term bank loans and public offerings. About 79% shares are held by the Winfield family and the senior management of the company, remaining are distributed and traded in over-the-counter market. The company is engaged in the business of disposing the waste materials from industries and commercial customers. Winfield Refuse has 22 landfills, 26 transfer stations and material recovery facilities, serving 33 collection centers.

Problem Statement

Winfield Refuse wants to solidify its competitive advantage in the market. For this purpose, it is planning to acquire a larger company in the same industry. The company wants to maintain a competitive cost position as well as to expand its operations beyond its current geographical boundaries. After conducting a thorough study and evaluation of options; the management is of the view that the company should acquire Mott-Pliese Integrated solutions (MPIS). After negotiations, an agreement is reached and acquisition price is set at $125 million. For this acquisition; the company does not have sufficient finance; therefore, external financing will be required. For this, the company is considering two options one is finance by issuing new common stock from public and second is issue long term debt in form of bonds to insurance company.  Board meeting is in two days in which the decision is needed to be taken, therefore the company’s chief financial officer, Sheene, has to analyze thoroughly and prepare presentation on financing options so that a resolution of this matter is reached in the upcoming meeting.  Additionally, we are here to evaluate this case under the light of integration.

How the best acquirers excel at integration

As this case revolves around the acquisition of other companies so, in this report we will only discuss how the best acquirer can best perform the integration. Now the question is what does it mean by integration. Integration is defined as setting the right business goals, matching the objectives of both companies, bringing the two different cultures under same roof and hiring the best talent in the company that help to manage the acquisition and achieve the company objectives. So, after the acquisitions; the company would have to deal with the following factors to perform the integration efficiently:

Deal with cultural differences

The basic difference of culture is not limited to the difference between mission and vision of the company, but it is also the difference between the values, organizational environment and how the employees are treated in a company. A successful management of culture after acquisition would be possible there would clarity in the process. The management should make it clear to the employees of both companies regarding the objective of the acquisition, how this acquisition will work and it should also ensure them of their job security. The organizational culture is a very essential part in these activities; whereas, the management avoids these factors. Winfield and MPIS should collectively hire an integration manager to manage the integration during the acquisition, because the chances of a successful acquisition increases after the hiring of integration manager. Integration manager has to integrate the mission and vision of both the companies and should try to conduct different trainings for the employees in which they would be taught about following a single culture and accepting the change. Integration manager should arrange meetings at every stage and he should make diverse groups so that they everybody understands each other and accepts their cultural differences.

Convert sources of value into measureable performance goals

Both the companies Winfield and MPIS, should come together and look for the  factors that will work for them and both the companies should brainstorm the idea about optimizing their mutual revenue and then look for the resources of how best the companies can use those resources to meet their goals. The management will have to set the targets, develop a strategic plan and they will have to develop a progress measurement plan as well. In this case, Winfield has two options: one is finance by issuing new common stock from public and second is issue long term debt in form of bonds to insurance company. And the long term goals of the company is to reduce the cost and achieve the overall economies of scale. So both Winfield and MPIS should mutually evaluate the situations and make single decision. Winfield and MPIS have to develop a team that should have enough capabilities and capacities to fulfil the long term goal of organization. Further, the evaluation of both the options is given below and final decision would be included in the recommendation part.

As in case of MPIS and Winfield; this is implacable because both the companies have different backgrounds and different cultures, so the owners should make an integration team and ask them to work for the successful acquisition and achieve the mutual goals.

Analysis of the financing options

Winfield has two options, which are: issuing equity or increasing the debt. So here, we will discuss the advantages and disadvantages of both the options……………………….

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