9-1 Acquisition Proposal Executive Summary 1
Acquisition Proposal Executive Summary
Myrnia Brown
SNHU/MBA 620
James Walter
April 28, 2024
9-1 Acquisition Proposal Executive Summary 2
Acquisition Proposal Executive Summary
Introduction:
TransGlobal Airlines has been in the market to expand their company domestically,
globally, and technologically. For this reason, they have been considering the acquisition of two
smaller airline companies. After months of reviewing financials and other relevant
documentation for both companies, as well as compiling balanced scorecards for both, the
executives at TransGlobal have decided, on which company they will move forward with, and
this report will lay the basis for said reasoning.
Situational Assessment:
TransGlobal Airlines is currently ranked second in the US and Global market share,
proving it to be an industry leader. Financially, net income has been on the rise over the last three
years. From 2017 to 2018, income rose by 22.79%, then again by 21.15% by the end of 2019.
Earnings per share saw a 27.86% rise from 2017 to 2018, then again by 29% by the end of 2019.
Domestic, Atlantic, and Latin revenues grew, with the only drop coming from the Pacific area.
Assets and liabilities have gone up over the last year, but that is due to the purchase of new
aircraft. Stockholder equity rose from 2018 to 2019 by 13.5%, showing the company is in good
financial standing.
Analysis and Data: Company A and Company B
Company A is a small operation based out of Florida that has been in business since
1981. They fly to fifteen destinations in the Caribbean Islands and cater to luxury tourists and
business class. Though their retention rate and new customer growth is below that of
TransGlobal, they do have one major offering – their destinations. As it stands, TransGlobal does
9-1 Acquisition Proposal Executive Summary 3
not currently fly to the Caribbean, so acquisition of this company could be huge for profits,
customer retention, and improving their ranking amongst customer and employee satisfaction.
Over the last few years, Company A has repeatedly grown its revenue. From 2017 to 2018, they
saw a revenue increase of 2.9% and an additional 2.9% increase the following year. Assets
remained the same for two years, with a loss in 2019, which could be equated to the sale of
some, as liability dropped the same year. In the same respect, shareholder equity has been
consistent as well, aside from the selling of assets in 2019. Their cash flow has been consistent
and shows that Company A is in a great financial position. With all businesses, Company A does
have a few downsides. Their fleet is starting to age, ground operations relative to aircraft
turnaround, and employee turnover rates are on the higher side. They also offer a limited market
share, with their primary destination being that of the Caribbean. From TransGlobal’ s
standpoint, employee turnover is something manageable that they already deal with but on a
smaller level. Fleet maintenance is always a top concern, but again, no a new task they would be
taking on with the acquisition.
Company B began its operations in 1988, and is in Orlando, FL. The company has
ninety-eight employees. Destinations include the Bahama Islands; Savannah, Georgia; Atlanta,
Georgia; Tampa, Florida; Fort Myers, Florida; Miami, Florida; Tallahassee, Florida; and New
Orleans, Louisiana. The aircraft’s capacity is 12-50 seats. The company’s target market is
Florida and nearby destinations, and the market segment is tourists and business. Major
competitors are Delta Connection, America Eagle, Sun Country, and Frontier. Company B is a
smaller player in the market, the company is more of a follower than a leader; however, the new
president has a desire to shake things up. The image of the company as cheap transportation is no
longer sufficient, and the leadership team seeks to demonstrate that even a small company can be
9-1 Acquisition Proposal Executive Summary 4
an innovation leader (MBA 620 Company B Information, 2022). In the balanced scorecard for
Company B, we established strategic objectives for each category of a balanced score card;
financial, internal process, customer/ market, and learning and growth. The strategic objective
for the financial category is to increase company profits. The key performance indicators include
the profit margin and percent net profit. By measuring and determining where the company
stands in their overall financial health will help determine if the company is in good financial
standing to be able to introduce ways that will increase company profits. In the category of
internal process, the strategic objective is, lead in innovation. The KPIs associated with this
objective include the number of new products produced and degree of innovation. As Company
B evaluates the number of products and the degree of innovation, this will affect the innovation
ideas the company plans to develop. Looking at the current number of products produced will
help assess how many products we need to develop to become a leader in innovation. In the
category of customer/ market, the strategic objectives are to produce high quality products, and
retain customers. The KPIs associated with this category include customer negative feedback,
percent market share, and percent customer churn. Measuring these KPIs will directly affect the
results of our strategic objectives because by measuring customer feedback we can improve
specifically what customers do not find to be a positive part of the company. In the category of
learning and growth, the strategic objectives are to decrease turnover rate. The KPIs associated
with this objective include percent of employees enrolled in a learning program at work, and
percent of employees trained in areas. This strategic objective will help measure the percentage
of employees that are taking classes and taking advantage of the training.
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Recommendation:
After a significant review of both companies, the board has chosen to continue with the
proposed acquisition of Company A. They have a great reputation in the aviation industry, cater
to the same market segment as TransGlobal and go one step further to offer a market destination
that TransGlobal is looking to expand to. They are financially stable, have a great customer
retention rate, and have future goals that align with that of TransGlobal.
