Managerial Finance Acquiring an Employment Agency

Question :

Describe acquiring an employment agency in terms of finance

Answer :

It is willing to expand in the related field by acquiring an employment agency which provides computer programmers and processor operators. The company has also considered the purchase of Bigger-staff & McDonalds (B&M). There are some instances that can considered favorable are related to the B&M’s acquisition. However, there is no doubt that when other firms are acquired, there’s always some pre-requisites and legal formalities, which has to be kept in consideration. Along with that, one major issue that can come up is of ethics. 

The decisions made by the company can have ethical implication and one important ethical challenge can be associated with the killing of competition. It is quite understandable that the presence of competition ensures that the buyers receive good products from the companies. There have been cases where monopolies do not work very well, either for the supplier or the buyer. However, in the current case, it is not clearly mentioned what market capabilities are being acquired. Therefore, it cannot be stated with certainty about the ethical implications (Christensen et al, 2019). 

Now, coming to the financial aspect, considering the B&M’s performance, it can be stated that the company seems somewhat acceptable and can be a good addition to the company’s asset. It can be found that the free cash flow of the company is expected to growth constantly for the years to come at 5%. 

Now, on the employee aspect, it can be stated that the acquisitions may or may not have adverse impact on the employees working in the organization. It is possible that the parent company does not find most of the staffs adequate to work with it, and thus it may decide to lay off most of them. Thus, it seems quite immoral to purchase an organization whose organization’s staffs do not fit the parent company and the company makes the decision to do layoffs. Further, differences among staffs may create another challenge for the workplace harmony. Various situations may erupt such as discrimination, and other such conflicts (Triana et al, 2019)

References:

Triana, M. D. C., Jayasinghe, M., Pieper, J. R., Delgado, D. M., & Li, M. (2019). Perceived workplace gender discrimination and employee consequences: a meta-analysis and complementary studies considering country context. Journal of management, 45(6), 2419-2447.