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Gap Analysis: Lester Electronics
Mergers and acquisitions are increasingly common in the marketplace as many organizations are combining in order to increase the value of an organization. “A merger refers to the absorption of one firm by another. The acquiring firm retains its name and its identity, and it acquires all of the assets and liabilities of the acquired firm. After a merger, the acquired firm ceases to exist as a separate business entity,” (Ross, Westerfield & Jaffe, 2005, p.797). Sometimes mergers are friendly and other times acquistions occur after the board has rejected the acquisition. Prior to entering into an acquisition organization’s must carefully stake out a plan in order to attempt to account for any challenges that might occur. Improper financial planning could be detrimental to both organizations.
Situation Analysis
Issue and Opportunity Identification
Lester Electronics (LEI), a consumer and industrial maker of electronic parts, markets products to small- and medium-sized original equipment manufacturers, repair facilities, and small local distriubtors throughout America and Europe. LEI entered into an exclusive agreement with Shang-wa Electronics, a small Korean company, to allow Lester Electronics to sell Shang-wa capacitors in the United States. The agreement stands as long as Lester Electronics purchases a minimum of $1 million (wholesale) of products annually. Over the years, CEO’s John Lin of Shang-wa and Bernard Lester of Lester Electronics, have built a friendly relationship that has created success for both organizations. Most recently both organizations have been approached with acquisition offers which poses immediate action.
Transnational Electron ...