“Are You Paying Too Much for That Acquisition?” by Eccles, Lanes

by | Mar 10, 2023 | Essays

Read the assigned article, “Are You Paying Too Much for That Acquisition?” by Eccles, Lanes, and Wilson, from Harvard Business Review (1999).

In the textbook, complete the following problems.

Problem 7.11 (Show calculations for a, b, and c.)
Problem 7.12 (Show calculations for a and b.)
Using information from “Are You Paying Too Much for That Acquisition?” address the following with a minimum of 500 words.

List and describe the components used to calculate synergy value.
Critically evaluate which component is most underestimated. Explain your answer.

Sample solution

Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell. 

In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.


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God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.

Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.

To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.

 

References

Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.

Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies, 4(8), 487.

Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.

Sample Solution

The article “Are You Paying Too Much for That Acquisition?” by Eccles, Lanes, and Wilson (1999) outlines the key components used to calculate the synergy value of an acquisition. These components include operating synergies, financing synergies, level of integration necessary to achieve expected synergies, and taxes. When evaluating acquisitions it is important to not only take into account the present value of cash flows before and after the acquisition but also any additional costs associated with achieving those cash flows that increase its value in comparison with other alternatives.

Sample Solution

The article “Are You Paying Too Much for That Acquisition?” by Eccles, Lanes, and Wilson (1999) outlines the key components used to calculate the synergy value of an acquisition. These components include operating synergies, financing synergies, level of integration necessary to achieve expected synergies, and taxes. When evaluating acquisitions it is important to not only take into account the present value of cash flows before and after the acquisition but also any additional costs associated with achieving those cash flows that increase its value in comparison with other alternatives.

Operating Synergies refer to improvements in revenue or cost savings as a result of combining two businesses through economies of scale or scope or changes in product mix which can increase operating income beyond what would be achieved independently. Financing Synergies come from changes related to debt structure such as lower interest rates due to increased creditworthiness resulting from higher debt service coverage ratio or changes in capital structure like equity deals versus asset deals. Level of Integration refers to the cost involved with creating a larger combined entity such as IT systems needed for consolidation or management redundancies resulting from mergers often involving extra personnel costs like severance payments. Lastly Taxes are incurred when assets must be transferred between entities and involve tax law considerations like depreciation schedules that can affect post-merger earnings potential.

Of all these components, I believe Level Of Integration is most underestimated during evaluations because there can often be indirect costs associated that don’t show up on financial statements and therefore go unaccounted for which can lead underestimations of total acquisition costs post-integration and even failure if these hidden costs are too high relative to expected benefits gained by acquiring another firm (Eccles et al., 1999). For example, having different information technology systems across companies makes it difficult for teams from different business units within an acquired company operate cohesively together leading more resources being allocated towards integrating them rather than expanding operations . Additionally unnecessary expenses may occur due to duplicate functions created by merging companies that weren’t identified prior reducing overall potential gains compared with expectations while increasing resource investment required making obtaining positive returns less likely (Eccles et al., 1999). Therefore when analyzing potential acquisitions managers must consider level of integration cost carefully since they could have significant impacts on total projected return despite their previously unseen nature.

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