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Mergers and Acquisitions

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  1. Bakery industry analysis
  2. Financial analysis
    1. Balance sheet
    2. Income statement
  3. David Kuchen situation
  4. Recommendations

The acquisition of a company involves several significant steps that one must assess in order not to fail and lose money in the process. This is the case of David Kuchen, a 30 year-old graduate from a top MBA school, who is looking for a business to acquire or some other related opportunity. He aims to become a senior manager with equity in a small business. He focused his research on light manufacturing, service and distribution companies. These are small companies that don't require too much specialized knowledge. Additionally, he has some specific requirement for his business. He wants to avoid businesses with less than $2 million in sales, own 20 percent of the business over time, receive a $100,000 annual salary, acquire a business with at least $500,000 in EBITDA, and has a good middle management and/or an owner willing to complete a proper transition to a new inexperienced manager. He prefers the head office to be located in or near the Great Toronto Area that offers a few solid growth opportunities. Finally, he discovered Cake Masters, a commercial bakery specializing in high-end dessert items, based in Ontario.

[...] She is well- known for her innovative products that are low in fat and taste exceptionally good. She is a real competitive advantage for the company. - Cake Master has developed close relationships with few key suppliers, which may constitute as a good competitive advantage. When you have a close relation with your suppliers, you can benefit by some favors. - The upscale restaurant chain Franco's is the most important customer of Cake Masters; indeed it represents almost two-third of Cake Master's sales. [...]

[...] Through his MBA program and his experience, David Kuchen has developed a network of potential investors and advisors, who will be helpful to find, acquire and operate a business. Weaknesses: Kuchen has already run a small business but he has no experience in managing a large business. Indeed, Cake Master is a company of 54 employees, so if has no experience in that it will be difficult for him to manage all these people. He wants to acquire a business but he has no money to invest, he has to find investors and convince them to invest in his business, and it is not an easy thing to do. [...]

[...] In conclusion, after the study of the financial statements of Cake Master, we can say that it is financially in good potency, that it has strong basis to last for many years in the future thanks to the amount of cash, the good revenues and the good net income. III. David Kuchen's situation In this part we will study David Kuchen's situation, to see if he would be able to succeed in acquiring the bakery. We will first see what his objectives are, what he is looking for, then his strengths and weaknesses and finally the opportunities that are offered to him. [...]

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