As seen all over the news, Estée Lauder acquired Tom Ford in a $2.8 million deal. Apparently, consultants and analysts helping the companies come to their decision on this acquisition didn’t feel the need to include me in the conversation. After spending an entire summer sitting at my kitchen table, doing countless cases from Crafting Cases in my spiral notebook every evening after work, I thought I would garner more respect. If there’s one thing I know though, it’s that practice makes progress — even if that ‘progress’ is making a strategic framework on two businesses that already agreed on an acquisition.
Below, I have made up my own case question in regard to the Estée Lauder/Tom Ford acquisition.
Estée Lauder is the second-largest cosmetics company in the world. They are a manufacturer of makeup, skincare, fragrance, and hair care products. Tom Ford is a luxury fashion house featuring made-to-wear and ready-to-wear clothing, footwear, accessories, and handbags. Estee Lauder was faced with the decision to acquire the luxury brand, and they have hired you to help them make this decision.
Should Estée Lauder acquire Tom Ford?
- Do they have experience in clothing?
- Are there synergies that will cut costs?
- How much will this initially cost the company?
- Would the acquisition be for brand image or money?
- What are the returns on investment?
- What is the projected increase in annual revenue?
- What else could the money be spent on? (i.e. other major projects, acquire other brand focused on skincare)
- Will the warehouses/factories need to be moved elsewhere (especially if synergies are declared)?
- Will Tom Ford employees be kept or will there be a mass lay-off?
- If Tom Ford’s leadership is kept, would it be hard to integrate the two groups?
- Is Tom Ford better than other possible similar companies?
- What is the company’s projected growth?
- Is there a previous relationship between Tom Ford and Estée Lauder?
- Do the same demographic of Estée Lauder customers shop at Tom Ford?
- Will quality and style still remain the same under a different company?
- How do customers feel about the possible acquisition (perform market research)?
- What is the profitability/projected growth of Tom Ford under an acquisition?
- How will competitors react to this acquisition (i.e. price war)?
- What is Tom Ford’s market share vs Estee Lauder’s market share?
- Is there a market opportunity that makes this acquisition attractive?
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