Finance

Ma_KBLProject_04182020

Acquisition Project PlanMekdes AsaminewRasmussen College04/18/2020Acquisition Project Plan Project Scope The scope of the project is a vital component of the project management plan. It defines the extent and boundaries of the project. The project scope includes a list of tasks, deliverables, costs, and objectives. The scope helps project team members in making critical decisions since it states the responsibilities and boundaries of the project. As a result, the project scope is essential for the successful completion of the acquisition project. The main objective of this project is to acquire one of its competitors who will enable Kingston-Bryce Limited (KBL) to expand its operations and increase the workforce. The acquisition of the competitor is expected to elevate the performance of the organization through an efficient reduction of cost and revenue growth. Another goal of the project is to create a new market for the company. According to Po (2015), acquisition and mergers (M&A) provide an opportunity for companies to sell their products in a new market. Additionally, the acquisition project objective is to diversify its business operations. Currently, KBL specializes in the production of hand-crafted dining room tables. Therefore, acquiring the competitor will allow the company to venture into the production of custom furniture. The deliverables of the acquisition project are categorized into four phases. Phase one of the project involves defining and explaining the decision to acquire another company. The step includes detailing the importance of acquisition to the company, both short and long-terms. The approach helps in convincing key stakeholders to back up the project plan. The second phase of the project is identifying and screening the target company. Deliverables in this phase include due diligence of the identified companies, quick valuation, and shortlisting potential competitors for acquisition. During stage three of the project, the management will deliberate on shortlisted companies and rank them according to preference. A company with the most desirable outcome will be selected for acquisition. In this case, Kingston-Bryce Limited will select a custom furniture manufacturer. Other critical tasks in this phase include the negotiation of the deal and the signing of the contract. According to Chaves (2012), both parties sign a confidentiality agreement form where they consent to share all business, legal, and financial information regarding their companies. The agreement allows KBL to conduct due diligence and estimate the value of the competitor using the discounted cash flow (DCF) method. On the other hand, the agreement enables the seller to determine the ability of KBL to acquire their company.  The final phase of the project involves the integration of the company into the organization. This process includes integrating the HR, IT, and other critical operation components of the competitor into the KBL organizational system. The process also allows KBL to take control of the new company. Funding Schedule The funding schedule refers to the plan through which the company will finance the project. Usually, the project sponsor is responsible for availing resources necessary for the successful completion of the project (Pinto, 2009). In collaboration with the project manager and key stakeholders, the project sponsor prepares the project budget, which is submitted to the KBL’s board of directors for approval. The board had allocated the acquisition project $5 million, and the funding will be done in three cycles. In the first cycle, the project will receive $1 million, which will cover all the costs incurred in the first, second, and part of the third phases of the project, including due diligence, valuation, and negotiation. The funding in the second cycle is $3 million, and this will be used to acquire the competitor and to seal the deal. The funding in the final phase will be $1 million, and this will go to the integration expenses, including the transfer of data, HR and IT integration, and training of the new workforce. Timelines for the Acquisition The acquisition project will take 18 months to complete. The initial stage, which involves the definition and planning of the project, will take 3 months. Some of the tasks that will be completed in this phase include identification of key stakeholders, approval of the project, budget preparation, and establishment of the project team. Other tasks include the delegation of roles and responsibilities and identification of potential risks. The second phase of the project will take 4 months to be completed. During this period, the project managers will lead the project team in identifying potential companies for acquisition and screening them. The team will also conduct a quick valuation and due diligence to determine the best candidate for acquisition. Once this is done, the project manager will compile a shortlist and submit it to the board of management. The third phase will take 8 months. This phase takes a lengthy period to complete since it involves complex tasks such as in-depth valuation, due diligence, and negations. Other tasks include the application of regulatory approval and contractual signings. The final phase will take 3 months to be completed. Majorly, the project team will be focusing on the integration of the new acquisition into the organization. Some of the tasks involved are IT integration, HR integration, training, and data transfer. ReferencesChaves, S.F. (2012). Development of a Project Management Methodology for Supporting  Mergers & Acquisitions (M&A). Industrial Master of Industrial Management (IMIM), http://www.diva-portal.org/smash/get/diva2:556304/attachment01Pinto, J. Â. C. (2009). Financing the project. Paper presented at PMI® Global Congress 2009—EMEA, Amsterdam, North Holland, The Netherlands. Newtown Square, PA: Project Management Institute.Po, D. (2015). Benefits of mergers and acquisitions to strategic buyers and impact on post-merger integration. Retrieved from http://app1.hkicpa.org.hk/APLUS/2015/12/pdf/44_Largesource1.pdf

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