Lester Financing Solution

Running head: Financing Solution: LESTER ELECTRONICS

Financing Solution: Lester Electronics

University of Phoenix

MBA 540: Maximizing Shareholder Wealth

Financing Solution: Lester Electronics

Lester Electronics (LEI) has received approval to facilitate the purchase of Shang-Wa Electronics for $200 million dollars. Throughout the course, individually and as a group, financing methods have been explored in detail to execute such a purchase scenario. In addition, benchmark organizations were identified and studied to support the multiple methods available for financing. Within this paper, potential financing solutions for LEI will be highlighted as discussion points. However, it is the goal of this analysis to identify the optimum solution which maximizes LEI’s shareholder wealth and provides the least financial risk given the current economic conditions.

The members of our learning team took on the role of an individual board that was hired to analyze the acquisition of Shang-Wa by Lester Electronics. Our team was charged with making a recommendation to the leadership of LEI on how to smoothly see this purchase through and create long term shareholder value. Our board studied the financial statements of both companies as well as considered the current business climate in both the United States and the world. The results of this analysis resulted in a unanimous recommendation on how LEI should proceed.

Potential Financing Solutions

Through collaborative brainstorming as a group, multiple financing options were discussed for LEI to execute this initiative to purchase Shang-Wa weighing both risk and rewards. For example to generate the capital needed, LEI can offer a combination of selling both common and preferred stock. As a high-level overview, common and preferred stock translates to ownership rights to an organization. Highlighting the difference between both common and preferred stock, corresponds to the hierarchy in which dividends are...