CAPSTONE CASE: A PROPOSED ACQUISITION OF US AIR BY DELTA

Week 1 Course Project: Team Charter

Course Project: Team Charter

Prepare Team Charter:

Team Organization and Management

Brief Overview of Project

Use template posted in the Files section of the Course Menu

Teams choosing their own project (Option 2) must prepare and submit a draft for approval.

Place the document in the Files section of the Course Menu by the end of the week.

Week 2 Course Project: Proposal

Under the assumption that your organization (the acquiring company) is in a growth mode, identify an acquisition target that is in keeping with your organization’s mission and strategy. Use the ACCT600 Acquisition Scenarios in the Files section of the Course Menu to select your acquisition target.

Perform the industry analysis.

Prepare a brief, written proposal to the executive management team, explaining your potential choice (or choices) for acquisition: Overview of potential acquisition and why it makes sense to the parent. This is the who, what, where, why, when, and potentially how. You will consider many factors, including your industry as a whole and the current and expected economic climate.

Place the document in the Files section of the Course Menu by the end of the week.

NOTE: The rest of the course will be spent doing the due diligence necessary to make an informed recommendation based on the work done through the end of Week 7.

Week 3 Course Project: Executive Reports Part A—Internal Management

Prepare an executive level report related to the target acquisition company’s financial and operational strengths and weaknesses that addresses the acquiring company’s internal management team. Key words: synergistic, opportunistic, and financial. Report on what your research into the target company’s current financial and operating status is (this should include a financial statement review and examination of the footnotes in the annual report) and report it your executive team and any key internal personnel. There should also be some consideration into how what is discovered makes the target a good (or bad) acquisition at this time.

Place the document in the Files section of the Course Menu by the end of the week.

Week 4 Course Project: Risk Analysis

Evaluate risk factors for target acquisition company.

Evaluate risk factors present in the parent (acquiring) company.

Prepare a report on this analysis. This report should complement the previous documents from Weeks 2 and 3 and delve into areas of risk exposure for the parent in making the acquisition. The key is to identify the major risk exposures and how they can be mitigated.

Place the document in the Files section of the Course Menu by the end of the week.

Week 5 Course Project: Summary of Performance Tests with Exhibits

Prepare a summary of performance tests and analysis of the target acquisition.

Perform the following tests to help determine what the acquiring company will pay for the acquisition—this is a range. The focus of this deliverable is the target acquisition company.

Calculate the value of the firm's operations.

Calculate weighted average cost of capital (target company).

Determine the firm's intrinsic value.

Calculate the firm's market value.

Determine the firm's book value.

Determine what the parent company will pay for the target acquisition company. Be sure to include how the target company provides synergies and opportunities to the parent company.

Place the document in the Files section of the Course Menu by the end of the week.

Week 5 Course Project: Peer Review

Open the Peer Review Form posted in the Files section of the Course Menu.

Fill in the appropriate information and scores for each of your team members.

Place the document in the Files section of the Course Menu by the end of the week.

Week 6 Course Project: Summary of Financial Analysis with Exhibits

Perform tests to help determine how the acquiring company will pay for the acquisition. The focus of this deliverable is the acquiring company.

Identify and evaluate sources of debt financing.

Identify and evaluate sources of equity financing.

Compute cost of debt financing.

Compute cost of equity financing.

Determine optimal target capital structure.

Calculate weighted average cost of capital (parent company).

Determine how the parent company will pay for the target acquisition company.

Develop a strategic growth plan and explain how this acquisition supports the plan.

Place the document in the Files section of the Course Menu by the end of the week.

Week 7 Course Project: Executive Report

Prepare a report for executive management describing how the acquisition can be financed. Use the information from deliverables 5 and 6.

Place the document in the Files section of the Course Menu by the end of the week.

Week 8 Course Project: Final Paper and PowerPoint Presentation

Prepare the Final Due Diligence Report with supporting documentation, using the Final Due Diligence Report Template in the Files section of the Course Menu.

Present to executive management and the board of directors. Present an executive level document and presentation noting what was discovered during due diligence in Weeks 1 through 7 and your recommendation on whether or not the target company should be acquired.

Week 8 Course Project: Peer Review

Open the Peer Review Form posted in the Files section of the Course Menu.

Fill in the appropriate information and scores for each of your team members.

Place the document in the Files section of the Course Menu by the end of the week.