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Landmark Solutions

Broadway would benefit from acquiring Landmark Facility Solutions for $120 million for the following reasons: 1) The facility management industry is fragmented with many small private players, and this acquisition would help Broadway realize economies of scale and cost synergies. 2) The acquisition would allow Broadway to offer a more compelling value proposition and help realize premium pricing, generating revenue synergies. 3) Bundling contracts through the acquisition could help facility managers improve client relationships, secure larger contracts, and increase Broadway's brand recognition. 4) The acquisition would also help diversify Broadway's services. An optimistic valuation scenario puts Landmark's value at $183 million, justifying a $120 million bid.

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214 views4 pages

Landmark Solutions

Broadway would benefit from acquiring Landmark Facility Solutions for $120 million for the following reasons: 1) The facility management industry is fragmented with many small private players, and this acquisition would help Broadway realize economies of scale and cost synergies. 2) The acquisition would allow Broadway to offer a more compelling value proposition and help realize premium pricing, generating revenue synergies. 3) Bundling contracts through the acquisition could help facility managers improve client relationships, secure larger contracts, and increase Broadway's brand recognition. 4) The acquisition would also help diversify Broadway's services. An optimistic valuation scenario puts Landmark's value at $183 million, justifying a $120 million bid.

Uploaded by

mans
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Landmark Facility

Solutions
1. Does Broadway benefit from acquiring Landmark Facility Solutions?
How can Harris Justify a $120 million bid for Landmark?

 The industry was very fragmented with many small private players and they were very competitive
 The value or synergy can be created in the following ways:
 By engaging economics of scale – cost synergy
 They wanted to offer a compelling value proposition and help realize premium pricing – Revenue synergy
 Bundling contracts helps facility managers to improve client relationships, secure larger contracts and increase brand recognition
 It will also help in diversification of services
 Valuation of broadway in an optimistic Scenario is $183 Mn and hence $120Mn is justified
 [Working attached]
2. If Broadway proceeds with the acquisition which financing
alternatives should be chosen, and why? How Broadway would be
servicing its debt after the acquisition.

 Analysis needs to be performed with both debt and equity cases.


 In general the capital structure would not affect the valuation
3. Does Broadway reduce shareholder value if it selects the mix of debt
and equity financing alternative? What is the cost of equity dilution?

 The control of equity holders is diluted when the company issues stock to the new stockholders
 Existing stockholders are concerned when the company issues new shares
 Hence there will be a reduction in value

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