Lester Electronics


Problem Solution: Lester Electronics
MBA 540
University of Phoenix

Problem Solution: Lester Electronics (Paul Robey)
      The order has been given from Lester Electronics Incorporated (LEI) board of directors to develop financing solutions for the acquisition of Shang-wa Electronics. LEI must protect the company since 43% of their revenue is tied to Shang-wa’s exclusive line of capacitors. Both companies have been approached by possible acquisitions by third parties Avral and Transnational Electronics companies. This acquisition raises several unanswered questions for Bernard Lester. What is the best method to structure the financing for all parties involved? What financial strategies will the new firm employ? What new markets will be targeted after the merger? Will there be any changes to the capital structure of the organization? Will the combined company have any financial leverage for future projects? What solutions can LEI and Shang-wa expect to implement? What are the risks associated with the different proposed solutions? What is the approximate timeline for these projects milestones to be completed? Lester must employ an aggressive growth strategy to keep pace with multinational behemoths’ such as Avral and TEC or otherwise they will be forced out of their business as their market share is depleted. The challenge for LEI is that they have to choose and aggressive growth strategy that will allow them to sustain long-term growth post merger. Lowering their current tax burden must also be included as they consider their financial leverage to sustain growth opportunity. Combined the company’s targets a minimum of 25% increase in revenue within two years. Sustainable growth rates and Weighted Average Cost of Capital (WACC) will also need to be calculated so that the appropriate financials are selected.   Integration strategies will also have to be employed along with dealing with cultural differences...