Flinder Valves Case Study

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Register to read the introduction… He had a good top-management team, but he didn’t think any one of them could step in and run the show alone. He found stability in the RSE International combination that was worth something to him. In the increasingly global market place with more costly development, FVC needed a deep-pocketed partner to expand and to bankroll more research. Flinder believed that the company would also benefit from gaining access to a large marketing and distribution network. As the company continued to grow, it would need to gain production know-how for high-volume manufacturing. Flinder Valves did not have this kind of expertise. Finally, there had been an increasing trend of consolidation in Flinder Valves’ industry over the last year. Flinder feared that without a well-financed partner, the company would be swamped by competition. He was intrigued with the possibility that Flinder Valves might be more fully valued if it were part of a larger, more diversified enterprise. Thus, when the merger opportunity with RSE International Corporation came along in 2007, Flinder determined to make it work as best as he …show more content…
Eliot was seeking a small, well-managed manufacturer that could offer RSE strong growth opportunities and bring it more specialized, higher-technology products that would be less susceptible to succumbing to the competition. Although RSE had done well, Eliot felt the company lacked the ability to be innovative. No new products had been developed over the past two years, and Eliot personally felt that the research and development (R&D) group at RSE International had fallen behind its competitors. FVC, with its proven management and engineering skills, seemed to offer the R&D capabilities and growth prospects that Eliot sought. Eliot realized that time was of the essence, especially since other competitors were also interested in Flinder Valves. Nonetheless, he wanted to be certain that acquiring it would truly place RSE in a better competitive position. One concern was how well FVC’s employees would handle the transition from working in a small, entrepreneurial company to a much bigger place like RSE. The two companies possessed quite different cultures. Another concern was about the earnings dilution that RSE might incur from the acquisition. In fact, two directors had cautioned Eliot against impairing the firm’s forecasted growth in earnings per

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