Professional Documents
Culture Documents
Here the plan of action proposed is to acquire small players that offer healthier and more convenient
soups that are slowly gaining popularity. Acquisitions of this nature will further broaden the Brannigan
product portfolio into newer markets, hereby increasing the market share of the company.
Pros:
Entering into known markets is relatively easier, additional investments are negligible.
Entry in to the flavours that growing in the market will be favourable in the given market
conditions.
Option to merge the acquired brands into Brannigan brand umbrella, and thus reduce
cannibalisation effects.
Easy availability of debt at low rates will ease the acquisition and not impact the profit.
Cons:
EBITDA $ 4.20
Acquisition Price (x6.5) $ 27.30
ROI 29%
EBITDA $ 2.80
Acquisition Price (x6.5) $ 18.20
ROI -13%
Brothers Gourmet
Year 2011 2012 2013 2014 2015 2016
Sales $ 12.00 $ 12.72 $ 13.48 $ 14.29 $ 15.15 $ 16.06
Cost of Goods Sold $ 6.60 $ 7.00 $ 7.42 $ 7.86 $ 8.33 $ 8.83
Advertising & Promotion $ 1.62 $ 1.72 $ 1.82 $ 1.93 $ 2.05 $ 2.17
Cannibalization $ 4.92 $ 4.82 $ 4.72 $ 4.63 $ 4.53 $ 4.44
Net Earnings $ -1.14 $ -0.81 $ -0.47 $ -0.12 $ 0.24 $ 0.62
EBITDA $ 3.40
Acquisition Price (x6.5) $ 22.10
ROI -52%
Assumptions: