Lester Electronics Gap Analysis Essay Example | Topics and Well Written Essays - 1500 words

Lester Electronics Gap Analysis - Essay Example The process of merger is set in motion by Shang-wa CEO John Lin, as he thinks that the merger will give his company a much needed secured future. On the other hand, Lester Electronics CEO Bernard Lester feels that the merger will prevent future revenue losses. These merger plans were initiated by the actions of two other companies, Transnational Electronics and Avral Electronics, who try to take over Shang-wa and Lester Electronics respectively. But, if the merger plans between Lester and Shang-wa gets actualized it will nullify the other two companies take over bid. Along with that advantage, the merger will also create a lot of opportunities and bring in profits. But, even with all the opportunities, there exist some financial issues or threats that will cause the merger to fail. So, the correct decision has to be taken after analyzing the key financial issues, with the involvement of all the key people and departments, including the accounts department and its head Anne Lorale. â €Å"Good decision-making starts from the right place† (Paul & Elder, 2006 In the scenario, the merger of Lester and Shang-wa could spring up many issues particularly in the financial sector. Normally, in times of merger between two companies existing in different countries, the financial issues have to be dealt firstly, to make the merger a success. So, Shang-wa’s balance sheet and incomes statement has to be properly analyzed by Anne Lorale and her team, before going with the merger. As the income statements will clearly gauge the financial performance of a company over a specific period of time, it will surely aid Lester to grasp the financial condition as well as the value of economic assets of Shang wa. From the analysis of the financial statements, it is clear that the merger of Shang wa and Lester would lead to a low debt to equity ratio, increasing the chances of bankruptcy in the long run. The other issue that will arise in