Lisco Acquisition of a Minority Interest of Orion
(5 pages of text)
Case (Gen Exp)
A wealth management company in Chile that provided financial advisory services to high net worth individuals and pension funds was at a crossroads. After 15 years in business, the company had become very successful. To increase its value without incurring undue corporate financial risk, the owner, who has invested most of his personal wealth in the company, has the opportunity to make an investment in a similar wealth management company in Colombia. What are the risks and rewards of such a complex international merger and acquisition for this medium-sized enterprise operating in an uncertain political and economic environment?
Students need to have completed a first year corporate finance course. One financial accounting course is also recommended.
- To perform an in-depth financial analysis of the relative values of two companies, undertake a valuation of two companies and then discuss the financial risks — liquidity, options to acquire a percentage of the company, exchange rate exposure, tax considerations and how to compare different financial options.
- To link the financial analysis with the actual negotiated deal so the buyer can minimize the risks.
Finance and Insurance
Chile; Colombia, Small, 2010
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