This report tries to examine New Look's decision for the new acquirement by analysing the firm's performance in the last five years, internal capital markets (ICM), corporate governance and ownership structure, as well as advantages and disadvantages of acquiring a firm backed by a PE investor.
Finally, the last element of the analysis is the evaluation of the benefits and costs of New Look as a standalone firm, if Brait would undertake successfully an initial public offering (IPO) process to exit from New Look. In the conclusion, we provide a recommendation for the exit strategy of Brait from New Look, if the objective is either to maximise the return to the Limited Partners (LPs) or Brait acts in the best interests of New Look.
New Look Retail Group Limited (New Look) is an international multichannel retail brand, offering value-fashion for women, men, and teenage girls. The company has more than 900 stores, which are mostly based in the United Kingdom (UK). Its e-commerce grew sustainably over the last years and serves customers in 120 countries worldwide. Since 2015, New Look is owned by Brait Societas Europaea (Brait), a private equity (PE) firm.
It is now rumoured that the UK based retailer Next Public Limited Company (Next) is preparing a takeover bid for New Look.
Inhaltsverzeichnis (Table of Contents)
- 1 Introduction
- 2 Financial analysis of New Look
- 2.1 Profitability ratios
- 2.2 Liquidity ratios
- 2.3 Efficiency ratios
- 2.4 Financial structure ratios
- 2.5 Segment level performance
- 2.6 Interim summary
- 3 Internal capital markets
- 3.1 Benefits of internal capital markets
- 3.2 Drawbacks of internal capital markets
- 3.3 New Look acquisition and internal capital markets value
- 3.4 Interim summary
- 4 Next's corporate governance and ownership structure
- 4.1 UK corporate governance code
- 4.2 Board structure and directors of Next
- 4.3 Next's ownership structure
- 4.4 Effect on Next's internal capital market
- 5 Acquisition of New Look
- 5.1 The private equity firm Brait
- 5.2 Acquisition of New Look
- 5.3 Interim summary
- 6 Costs and benefits of New Look as a standalone company
- 6.1 Benefits of a standalone company
- 6.2 Costs of a standalone company
- 6.3 Interim summary
- 7 Recommendations
- 7.1 Maximising limited partners return
- 7.2 Best interest of New Look
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This case study analyzes the acquisition of New Look by Next, focusing on the financial implications and the role of internal capital markets. The study aims to evaluate the strategic decision-making process, assessing both the potential benefits and drawbacks of the acquisition. It also examines Next's corporate governance structure and its influence on the internal capital market.
- Financial performance of New Look prior to acquisition
- The advantages and disadvantages of internal capital markets
- Next's corporate governance and ownership structure
- The strategic rationale behind the New Look acquisition
- Evaluation of the acquisition's impact on stakeholders
Zusammenfassung der Kapitel (Chapter Summaries)
1 Introduction: This introductory chapter sets the stage for the case study, outlining the scope and objectives of the analysis. It provides a brief overview of Next and New Look, highlighting their respective positions within the retail sector and laying the groundwork for the subsequent chapters, which delve into the financial analysis, internal capital markets, corporate governance, and the acquisition itself. It acts as a roadmap for the reader, explaining the flow of information and the purpose of each section of the analysis.
2 Financial analysis of New Look: This chapter presents a comprehensive financial analysis of New Look, utilizing various profitability, liquidity, efficiency, and financial structure ratios. The analysis dissects New Look's performance across different segments, providing a detailed picture of its strengths and weaknesses before the acquisition by Next. This detailed financial overview is crucial for understanding the context of the acquisition and for assessing the value of New Look as an investment target. The chapter uses key financial ratios to paint a clear picture of the company's health and potential.
3 Internal capital markets: This chapter explores the concept of internal capital markets, examining both the potential benefits and drawbacks. It specifically analyzes the implications of internal capital markets in the context of Next's acquisition of New Look, evaluating the value created or destroyed through this internal allocation of resources. The discussion includes the advantages of efficiency and resource optimization and the disadvantages of potential biases and misallocation of capital. It positions the acquisition within the broader framework of corporate financial strategy and internal resource management.
4 Next's corporate governance and ownership structure: This chapter focuses on Next's corporate governance and ownership structure, examining its compliance with UK corporate governance codes and the impact of its structure on its internal capital market. The chapter analyzes how the governance and ownership structure facilitates or hinders efficient decision-making, capital allocation, and risk management within Next’s broader financial strategy. This forms a critical foundation for understanding how Next operates and makes decisions regarding acquisitions like that of New Look.
5 Acquisition of New Look: This chapter delves into the details of Next's acquisition of New Look, including the role of the private equity firm Brait. It examines the strategic motivations behind the acquisition, the negotiation process, and the financial structuring of the deal. The chapter critically assesses the rationale for the acquisition, examining potential synergies and challenges. It's crucial for understanding the specific dynamics of the acquisition and its implications for both Next and New Look.
6 Costs and benefits of New Look as a standalone company: This chapter analyzes the potential costs and benefits of New Look operating as a standalone company, providing a counterfactual to the actual acquisition. It explores various scenarios and assesses the potential outcomes of continued independent operation. This chapter allows for a comparative analysis, allowing for a comprehensive understanding of the strategic implications of the acquisition.
Schlüsselwörter (Keywords)
Internal capital markets, corporate governance, acquisition, financial analysis, profitability, liquidity, efficiency, financial structure, Next, New Look, strategic decision-making, stakeholder value.
Frequently Asked Questions: Next's Acquisition of New Look
What is the main topic of this case study?
This case study analyzes the acquisition of New Look by Next, focusing on the financial implications and the role of internal capital markets. It evaluates the strategic decision-making process, assessing the benefits and drawbacks of the acquisition, and examines Next's corporate governance structure and its influence on the internal capital market.
What are the key themes explored in the case study?
Key themes include the financial performance of New Look before the acquisition, the advantages and disadvantages of internal capital markets, Next's corporate governance and ownership structure, the strategic rationale behind the New Look acquisition, and an evaluation of the acquisition's impact on stakeholders.
What financial aspects of New Look are analyzed?
The case study conducts a comprehensive financial analysis of New Look using profitability, liquidity, efficiency, and financial structure ratios. It analyzes New Look's performance across different segments to understand its strengths and weaknesses before the acquisition.
What is the significance of internal capital markets in this case study?
The case study explores the concept of internal capital markets, examining their benefits and drawbacks in the context of Next's acquisition of New Look. It analyzes how internal capital markets impacted the value created or destroyed by the acquisition.
What role does Next's corporate governance play?
The case study examines Next's corporate governance and ownership structure, its compliance with UK corporate governance codes, and how this structure influences its internal capital market and decision-making regarding acquisitions.
What details about the acquisition of New Look are provided?
The case study details Next's acquisition of New Look, including the role of the private equity firm Brait. It examines the strategic motivations, negotiation process, financial structuring, and the rationale behind the acquisition, considering potential synergies and challenges.
What is the counterfactual scenario considered?
The case study analyzes the potential costs and benefits of New Look operating as a standalone company, providing a counterfactual to the actual acquisition. This allows for a comparative analysis of the strategic implications of the acquisition.
What are the key recommendations?
The study offers recommendations focused on maximizing the limited partners' return and acting in the best interest of New Look, considering the implications of the acquisition.
What are the keywords associated with this case study?
Keywords include: Internal capital markets, corporate governance, acquisition, financial analysis, profitability, liquidity, efficiency, financial structure, Next, New Look, strategic decision-making, and stakeholder value.
What is included in the Table of Contents?
The table of contents provides a structured overview of the case study, covering an introduction, financial analysis of New Look, internal capital markets, Next's corporate governance, the acquisition process, costs and benefits of New Look as a standalone company, and concluding recommendations.
What type of document is this?
This is a comprehensive language preview of an academic case study, intended for academic use and analysis of themes related to corporate finance, acquisitions, and corporate governance.
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- Moritz Meyer (Autor), Pedro Coelho da Silva Feteiro (Autor), Nikolaos Karakaisis (Autor), Anastasios Lingis (Autor), 2018, The use of internal Capital Markets based on the example of Next & New Look, Múnich, GRIN Verlag, https://www.grin.com/document/426433
