A M&A Pitch Book

A M&A Pitch Book
Student’s Name
Instructor’s Name
Course Code
Institutional Affiliation
Date
M&A Pitch Book
Introduction
Certain features, theories, and themes in the whole field of finance are interconnected and will be utilized for all the other purposes throughout the world. Financial management and aspects and functions are critical for the corporation’s core and long-term performance and determination. One of the many items and features that will be used in the role of finance and investment is the term of Mergers and Acquisition (Weber et al., 2013).
M&A currently has relevance for management and organizations because it is one of the factors that is deemed incredibly effective and necessary for a company. In addition, given the current economic downturn, various M&A, partnerships, and strategic alliances have been formed in order to strengthen the financial structure and function of these businesses. However, most countries still lack originality in the market (Sherman et al., 1997).
Several considerations constantly arise when a proposed merger is being considered, including the commencement of the merger, the rationale for the beginning, and the potential benefits that will be realized for both the parent and the other firm. Therefore, it is necessary to examine the primary theme of two organizations’ M&A positions. BroadSoft is one of the companies chosen for this report, and it is planning to merge with Cisco. It signifies that the research will focus on the financial aspects, namely BroadSoft’s financial competence. The project necessitates comprehensive financial computations based on the company’s annual report, as well as the computation of the company’s actual pricing.
Analysis and Findings
Cisco Systems purchased BroadSoft, a communication program as well as a service provider, in 2018. BroadSoft, based in Maryland, was established in 1998 and accomplished its initial public offering in 2010. Within various countries, this collaborates with airlines and large service providers. BroadSoft’s clients include AT&T, Verizon Communications, Sprint, Charter Communications, Comcast, and Vodafone. Furthermore, the firm develops technology that allows access providers to create cloud-based communications services such as voice, video, web conferencing, team messaging, and contextual services (Gummadi, 2016). In 2016, the company’s revenue was 340,962 million dollars.
Cisco Systems is a global American technology company that is acknowledged for its technology in computer networking. Cisco did not acquire celebrity as a firm that marketed its goods and services, particularly to other enterprises. Still, it was one of the biggest corporations in the United States in recent years. In 1984, Cisco came about, and it is based in San Jose, California. It created TelePresence in 2006, an evolution of videoconferencing that allows individuals in distant locations to interact as if they were in the same room (Adams, 2016). Cisco’s networking prowess helped it become a dominant provider of solutions for the Internet of Things, a widely credited notion to Cisco. Chambers stepped down in 2015 as the company shifted its focus from hardware to software.
Having above 71,000 workers worldwide, the firm’s heritage of transformation continues with industry-leading commodities and determination in routing and switching, in addition to high technologies such as local networking, IP telephony, optical networking, security, storage area networking, and wireless technology. In addition, it offers a wide variety of services in addition to its products, as well as tech support and advanced services. Cisco reported profits of $0.1 billion in the financial year 2018, having a yearly income of $49.3 billion, up to 2.8% from the preceding accounting year. Cisco’s shares were selling at above $43 for each share in September 2018, with a market funding of $213.2 billion. Cisco’s low net earnings for the financial year 2018 were brought about by the one-time tax charge that allowed the firm to transfer money abroad.
The Reason for the Merger
BroadSoft was not in a position where they needed to be sold, thanks to their excellent financials, product portfolio, and market share. There was suspicion that the founders desired a straightforward and tidy exit route after nearly 20 years of feeding the engine. BroadSoft owner, Behbehani, stated that the acquisition would give Service Providers greater options in terms of go-to-market, channel distribution, bundling, and offers. Cisco had more dominant offers in play as organizations grew larger, he added. BroadSoft valued Cisco’s brand, and they are adapting to the changing environment.
BroadSoft has a well-developed cloud-based UC&C portfolio with a sizable market share in the small-to-medium-sized company sector. Because Cisco focuses on the enterprise sector, they aren’t in direct competition; therefore, this acquisition makes sense. Here, Jon Arnolds looks deeper into the why, time-to-market, and buy vs. build justifications of the transaction (Manyala, 2021).
Cisco has developed its own cloud-based collaboration tool. Cisco Spark has a lot of room to grow its market share, and BroadSoft’s go-to-market approach through service providers appeals to Cisco because service providers are ideal Spark candidates. BroadSoft’s fully baked solution, as well as its skilled engineering and development teams, will be a valuable new resource. BroadSoft, according to Dave Michels, accelerates Cisco’s path to a strong, scalable company.
Industrial Analysis
According to Accenture, the wireless business generates $475 billion in annual revenue, representing up to 2.6% of the total US Gross Domestic Product (GDP) in 2016. The wireless section in the United States is larger than 87% of the states in the globe, placing it in the 24th position of the largest economy in the world, on top of Norway, Hong Kong, and Ireland. Every dollar of direct GDP endowment from the wireless industry gives rise to $3.207 in overall GDP influence across the American economy. In addition, the wireless industry offers 4.7 million jobs in the United States, with every direct wireless job having a multiplier effect of 7.7x.9 (Gutiérrez, 2013). Other industries, such as full-service restaurants (1.5x) and hardware manufacturing (3.9x.10), are far behind. Plainly, this has a huge effect on the economy as a whole. The wireless industry generated more than $1 trillion in economic output in 2016, making its monetary influence bigger than ever before.
Financial Ratio Analysis
In terms of profitability, cost efficiency is a critical factor that contributes to positive growth in the company’s bottom line. High Gross Profit Margin (GPM) demonstrates that the company has the...