cindy's homework

Introduction
This essay will be going to talk about the case about the Telecom’s takeover of AAPT in year 1999 which was deemed to be a highlight of telecommunication crisis of the acquiring firm. In my essay I will discuss the related subsequent performances of both the acquiring and the acquired firm. In the first section, the background of the two companies: Telecom and AAPT will be introduced, on the next section I will provide reasons for acquisition and a description of the Telecom’s takeover of AAPT that took place in 1999. Then, the third section will summarize the subsequent performance of AAPT, its impacts on Telecom and analyze the main causes for the failure takeover. In the last section, I will provide an appropriate recommendation to avoid similar occurrence in the future.
Summary
Acquisition

Acquisition happens when one company buys all or most of the target company (or their shares). It can be doing in friendly or hostile way.

Dividend policy

Dividend policy is the company’s normal financial practice in considering their dividend payment. It usually stated clearly in the form of payout ratio. Company do not increase their dividend except they have positive confidence of their business activity.

Diversification

It is a technique within the financial risk management which mixture wide range of investments in its portfolio.

Business valuation forms
There are five common ways to valuate a business, they are
u asset valuation
u discounted cash-flow valuation
u historical earnings valuation
u relative valuation
u future maintainable earnings valuation
Company valuate its businesses generally do not use just one of these methods but a combination of some of them in order to obtain a more accurate value.

References:

King, D. R.; Slotegraaf, R.; Kesner, I. (2008). Performance implications of firm resource interactions in the acquisition of R&D-intensive firm. Organization Science 19 (2): 327–340.

King, D. R.; Dalton, D. R.; Daily, C. M.; Covin, J. G.. (2004). Meta-analyses of Post-acquisition Performance: Indications of Unidentified Moderator. Strategic Management Journal: 187–200.

Investopedia. (2010). Diversification. Retrieved 20, Feburary 2010. from:
http://www.investopedia.com/terms/d/diversification.asp

Frankfurter , G. M., & Wood, B. G., & Wansley , W. (2003). Dividend policy: theory and practice. USA. Elsevier Science Press.