Lester Gap Analysis: Ensuring a Successful Merger with Shang-Wa Electronics

Lester Gap Analysis: Ensuring a Successful Merger with Shang-Wa Electronics

  • Submitted By: CaritaC
  • Date Submitted: 01/19/2009 8:09 PM
  • Category: Business
  • Words: 980
  • Page: 4
  • Views: 602


Gap Analysis: Lester Electronics
Carita Childress
University of Phoenix

Gap Analysis: Lester Electronics
Lester Electronics Inc. (LEI) and Shang-Wa have decided to combine their companies and merge. After the merger is complete, Shang-Wa will not exist as a separate entity and LEI will acquire all of its assets and liabilities. However, the CEO of Shang-Wa, John Lin, is on the LEI Board of Directors and will still have input on what is going on in the company. Several issues present themselves when two companies come together. The firms have to calculate and plan a financial analysis as well as predict the outcome of the merger. They also have external pressures from competing companies that were interested in partnering with each firm. The greatest concern for this merger is determining the finance issues and finding solutions that will lead to a profitable and successful merger.
Situation Analysis
Issue and Opportunity Identification
LEI and Shang-Wa have been working together for years and have had a good and profitable business relationship. Recently, the two companies have been talking about merging the companies for several reasons. First, John Lin is ready to retire and wants to leave his company with someone he trusts. Secondly, other companies want to acquire both companies for their benefit, but it may not be beneficial for LEI and Shang-Wa. Lastly, their partnership would help them to meet global demand. In reality, if LEI loses Shang-Wa as a supplier, they will lose 43% of their revenue over the next five years. The loss could be detrimental for LEI, especially with the competition looking for opportunities to grow.
In order for the LEI/Shang-Wa merger to be successful they must have a financial planning strategy. Financial projections have been made to predict the profitability of the merger. Preliminary predictions show that the consolidation of LEI and Shang-Wa would...

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