Davis Service Group Case Study

However, in some business combinations, commonly called reverse acquisitions, the issuing entity is the acquiree. In a reverse acquisition the legal acquirer is defined as the acquiree for accounting purposes.

In 2004, the company made a significant shift in strategy. Its new “Growth Plan” called for the

Describe two major ways in which a company can grow. Give examples to illustrate the

Businesses grow when they have the resources to expand and opportunities exist for growth. Explain how the acquisition of Berendsen provided such a good opportunity for the Davis Service Group.

Describe two major ways in which a company can grow. Give examples to illustrate the

A business can develop by organic growth or inorganic growth a. Organic Growth: Organic growth in business refers to a company expanding its business through the use of its own resources and assets. Growing organically means a company expands without the use of mergers and acquisitions or other takeovers. An emphasis on organic growth is valued by many executives and investors since it shows a long-term, solid commitment to building the business. Organic growth can also be negative, meaning the company's business is actually contracting. Investors look at organic growth numbers to see if a company is increasing sales and revenues and if those increases are sustainable over the long term. Significance Organic growth shows how well management of a company is utilizing internal resources to increase sales and output. Mergers, acquisitions, and takeovers can provide an artificial boost to a company's sales and revenue figures; this can cloud the picture of how the company is managing its resources. By focusing on the organic growth of the company, executives and investors can see exactly how the company is meeting its goals through its own internal means. Workforce Issues Many executives prefer to grow their companies organically due to the complexity and organizational issues that result from mergers and acquisitions. One major issue is the effect of merging two company's workforces, which can often result in culture clashes and morale issues. Employees can resist changes in

the shares of another company. Thus, the company that owns the larger number of shares gets

Businesses grow when they have the resources to expand and opportunities exist for growth. Explain how the acquisition of Berendsen provided such a good opportunity for the Davis Service Group.

Voluntary combination of the two firms in to a new legal Entity. Mergers are effected by exchange of the pre-merger stock or shares for the stock of new company. Owners of each pre-merger company continue as owners, and resources of merging companies are pooled for the benefit of the new company. If the merger takes place between competitors, like in Mobilink and WARID, so it will be “Horizontal Integration”, and if the merger takes place among supplier and customer, so it is known as “Vertical Integration”.

Describe two major ways in which a company can grow. Give examples to illustrate the two ways of growing.

Describe two major ways in which a company can grow. Give examples to illustrate the two ways of growing.

1. Two major ways in which a company can grow are organically and inorganically (Davis, n.d.). Organic growth is growth that is achieved within an existing business, by increasing sales and number of clients to increase profitability. Organic growth can be achieved many ways. The easiest way is if a firm’s product is in high demand

A merger is defined by Investopedia as a deal to unite two existing companies into one new company, Takeover Definition | Investopedia. (2003)

Ownership flip-in plan: The target company purchase some smaller companies which using stock exchange, used to dilute the value of the target company’s stock (Wachtell, Lipton, Rosen & Katz.1999).

Describe two major ways in which a company can grow. Give examples to illustrate the two ways of growing.