Risk Analysis on Investment Decision

University of Phoenix te Arts, combine (SAI) manufactures digital imaginativeness Integrated Circuits (IC) that argon occupy in various electronic equipment (University of Phoenix Simulation, 2008). The accompany?s initial startup occurred during the smash of the semiconductor business, but the revenues in conclusion decreased by 40% (University of Phoenix Simulation, 2008). SAI survived by raw bes and frost groovy expenses. Currently, SAI?s Chairman, Hal Eichner, wants to order in a forecast that will increased the company?s foodstuff deal out and keep ace with unexampled engineering (University of Phoenix Simulation, 2008). SAI has dickens different opportunities to maximize sh atomic number 18holders wealth. ti Arts, Incorporated (SAI) has to analyze whether it would refund the company a emulous service to don W-Comm. The acquaintance would be considered an external investment strategy. match to Ross, Westerfield and Jaffe (2005), there atomic number 18 three legal shipway to acquire a squiffy 1) merger or consolidation, 2) learnedness of stock, and 3) acquisition of assets ( hit. 797). The acquisition of W-Comm would be a merger that will be incorporated into Silicon Arts as a intricate acquisition because they are non-related industries (Ross et al, 2005, par. 797).

The acquisition of W-Comm gives the company a competitive advantage of come in the wireless communication market, revenue enhancement, market gain, cost reduction, revenue enhancement gains, and reduction in the cost of capital (Ross et al 2005, par 802-806). However, there are disadvantages in acquisition through a merger. The conglomerate acquisition of W-Comm has the risk of SIA producing lacklustre financial exercise due to the lack of expertise and familiarity of the industry. The shareholders stock may be reduced. According to Ross et al (2005), ? ? ii firms merge, the variability of their combined value is usually less than would be true if the firms remained separate entities ? shareholders are likely to be worsened off [because]... If you want to bring a full essay, conk it on our website: Orderessay

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