Reference no: EM13960334

Please read the following instructions carefully.

General

Please ensure your submission is contained within one single document (copy excel files into a word document if necessary).

Referencing

1. You need to follow a proper referencing system in your paper. The MSc Finance VLE provides a short brief on the Harvard Referencing System that you may follow.

2. You also need to do a full bibliography of your sources.

Number of words

1. Your paper needs to have a maximum of 2,000 including footnotes (but excluding appendices).  If your report exceeds 2,000 words, then your mark will be based on the content of the first 2,000 words only. This is in accordance with the BPP manual of Policies and Procedures.

2. At the end of your paper, you need to write:

Coursework description

It is your first day in the offices as an investment analyst at Connor & Jones Partners LLP, a medium sized investment banking firm operating in the UK and European markets.  After completing the official induction, you are shown to your new desk. On opening your email, you find this message addressed to you from Annie Richards, a Director in the firm and your new manager.

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From: Annie Richards

Date: 28 November 2011

Subject: Potential target

Attachments: [Annual Report.pdf]  

Good morning,

Welcome to the team - great to have you on board! I am afraid I am in meetings all day today and then away on business for a few weeks, so will not have time to brief you personally on this matter. One of our clients is potentially looking to acquire a stake in a target company. On my return I am meeting with them to discuss how we might structure this deal.  Please can you pull together some analysis for me about the proposed target which I can read in advance of the meeting?

The information I need is restricted to the potential target at this stage.  Do not spend any time suggesting alternative targets or on producing detailed valuations.  We don’t have sufficient information as yet to do this properly.  

I have attached the latest annual report for the target as a starting point for your analysis (they’re on the company website and you’ll need to refer to this to get access to other years), 

although for all the points mentioned below, please draw on any other relevant resources to prepare the report for me, clearly stating the sources used.

The main areas you should cover in the report are listed below. The percentages provide an approximate indication of how you should prioritise your research time and content in the final report.

1) Analyse and comment upon the performance of the company for the last three financial years using primarily the information contained within the annual reports (and any relevant comparables you might find) - be sure to include reference to relevant financial ratios to support this analysis. In addition, 

a. Highlight any operational or strategic measures taken by the company and how this has affected performance over the past three years

b. Do not restrict yourself to just the traditional financial ratios; include any other relevant measures in your analysis, justifying why it is an important measure

c. Highlight any unusual or one-off items, including how this would have an impact on your analysis

Finally, our client obviously already has access to the annual reports so please do not write up information which is already readily available – focus on the analysis of the information instead.

2) Perform a detailed review of the target’s accounting policies and comment on any relevant areas which might impact on your analysis in 1) above.  In particular, discuss those accounting policies which the target and its competitors might have the highest sensitivity to.  (For example, inventory valuation for a retail company.)  

Evaluate how these policies could have an impact on your analysis of the company’s performance.

3) As a starting point for any potential valuations we might do further on, project and comment on the expected future performance of the company for the next two years, clearly stating your assumptions and reasoning. Please prepare projections for each of the next two years, again including reference to relevant financial ratios. You can assume there will be no significant changes in accounting policies and you should use the results of any interim reports available for the company.  Please ensure you include all three primary financial statements:

a. Income Statement

b. Statement of Financial Position

c. Statement of Cash Flows

4) Ensure you read the strategic plans of the company and evaluate, based on the financial health of the company, what their prospects are for achieving their goals.   

Then, drawing together all of your analysis, and taking into account all the information you may have on the company’s business environment, provide your recommendation as to whether or not our client should proceed with further discussions on this acquisition. Ensure your conclusions are supported fully by your analysis.

I won’t have much time to read the detail before meeting the client, so please keep the main body of the report (excluding appendices) to a maximum of 2,000 words.  Please ensure you summarise your key points upfront in some summary charts or tables which you think 

would be useful in providing a snapshot of the company’s business and financial situation.  

Include and refer to appendices where appropriate, especially for the more detailed aspects 

of your analysis which I may need to refer to during the meeting. 

I look forward to reading your report – see you in a few weeks and best of luck settling into your new role!

Thanks,