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You are on the analysis and acquisition team for a large corporation which is a leader in the commercial airplane manufacturing sector. Specifically, your company provides instrumentation and electronics that assist in the control and guidance of aircraft. Based on your strategic plan your firm has identified an industry shift to airframe manufacturers preferring to work with fewer subcontractors who can supply a larger number of airframe assemblies. As a result your firm is considering expanding their capability in this industry by acquiring smaller companies which are also in this industry and if acquired, would likely benefit from your corporate resources and capabilities. You have been tasked to analyze the desirability of acquiring a specific firm that specializes in designing and installing plane interiors, (seats, bulkheads, storage compartments, galleys, restrooms, etc.). Though the firm is not directly in your industry market sub-segment, your management team believes that adding this firm to their business portfolio could increase the company’s value in the broader airline manufacturing segment, particularly given the emerging preferences of airframe manufacturers. Your manager has asked you what your plan is for the analysis. Specifically, what strategic analysis tools would you use to analyze the acquisition’s potential benefit to your firm’s business; how its product lines and overall business would compare with your firm’s existing businesses; and what the likelihood would be that your firm’s current resources and capabilities would provide an advantage (or disadvantage) for the firm that is being acquired and its specific capabilities? The analysis and acquisition teams have already determined a preliminary price for the acquisition, though it is by no means firm, and they are concerned that they not pay “too much” to acquire the firm so you must quantitatively establish the acquisition target’s estimated value so your management team can confidently negotiate an appropriate final price offer for the target firm.

The following key questions must be answered by the analysis tools you select.

1. What needed new resources and capabilities can this firm bring to the parent corporation, what resource gaps, if any will this acquisition fill, and how will these resources and capabilities improve the core competencies and therefore competitive advantage of the parent firm? ^{[5 [10]}
2. What kind of product line synergies or conflicts might arise from this acquisition? ^{[5] [10]}
3. How will you quantitatively assess the value of the firm being acquired, and how will you determine if the new combined firm’s value increases or decreases as a result of the acquisition? ^{[5] [10]}

Describe the analysis tools you would use to answer these three questions and what information you would expect to derive from each tool’s use in order to answer the questions above.