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Table of Contents
Executive Summary.............................................................................................................................3
1. Introduction and Background........................................................................................................4
1.1 Serco Group Plc Profile...............................................................................................................4
1.2 Aim and Objectives......................................................................................................................4
1.3 Literature on Mergers and Acquisition.........................................................................................4
2. Acquisition Strategy........................................................................................................................5
2.2 Statement of Need.......................................................................................................................5
2.3 Applicable Conditions.................................................................................................................6
2.4 Costs and Performance................................................................................................................6
2.5 Delivery or Performance-Period Requirements...........................................................................7
2.6 Risk Assessment..........................................................................................................................7
2.6 Financial Assessment...................................................................................................................9
3. Plan of Action.................................................................................................................................10
3.1 Service Description....................................................................................................................10
3.2 Potential Sources.......................................................................................................................10
3.3 Competition...............................................................................................................................11
3.4 Acquisition Considerations........................................................................................................11
3.5 Business Valuation of the Target Firm.......................................................................................12
3.6 Milestone for Acquisition Cycle................................................................................................13
References..........................................................................................................................................14
Appendices.........................................................................................................................................16
Appendix A......................................................................................................................................16
Appendix B......................................................................................................................................18
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Executive Summary
As a business manager of Serco Group Plc the author has analysed the acquisition strategy of
Serco to take over the Listening Limited which is one of the leading contact centres in the
UK and provides outsourcing customer services to both private and public entities within the
UK. The Listening Companys latest accounts submitted to Companies House illustrate
58,000 cash at bank, 1,801,000 liabilities, 10,042,000 net worth, and 10,693,000 current
assets. In the past, the Listening Company has achieved many customer service awards on the
basis of satisfying customers, customer retention, and efficient advisory system. The
Listening Company provides services through multi-channels such as internet, fax, telephone,
and email. It is believed that acquiring the Listening Company will enhance existing contact
centre capabilities of Serco Group. Also, the scale of the Listening Company and their
expertise in call and contact centre will strengthen the capacity of Serco to deliver services to
existing and potential customers.
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2. Acquisition Strategy
2.2 Statement of Need
The Serco Group has undertaken several projects in the past to offer an integrated and
widespread approach of service delivery to people. Today, Serco provides in excess of 50
services and products to private and public entities in a range of fields. As Serco Group
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recently extended its contract with Docklands Light Railway (Reuters, 2013), it needs to
employ more contact centre services to comply with the requirements. Therefore, the
company has decided to acquire the Listening Limited Company which is one of the leading
contact centres in the UK but adversely hit by the financial crisis.
acquiring and plant or equipment. Similarly Design-to-Cost will also not be applicable as
Serco will not be involved in designing any new product/service. Should-costing will be used
when staff will conduct an in-depth analysis of the contractors plan to discover and remove
deficiencies and diseconomies in the Listening Company.
The performance criteria for each work element will be reviewed by the program office at
Serco Group and at the Listening Company to ensure the delivery of ample products/services.
Furthermore, the performance criteria will also be based on the anticipated target level of
performance and its frequency of measure (e.g. daily-basis, weekly-basis, monthly-basis etc.).
R7
Legal risk
R8
Activity processes sequencing risk
R9
Process integration risk
R10
Reckless enthusiasm risk
Risk avoidance: engage in alternate activity
Risk reduction: minimise the likelihood of risk
Risk transfer: transfer risk to other part
Risk acceptance: unavoidable risks
Result = PxI
Financial risk
Compatibility risk
Outcome risk
Operational cost risk
Corporate integration risk
Return on Investment risk
Impact (I)
R1
R2
R3
R4
R5
R6
Prob. (P)
Rank
Description
4
4
4
4
4
3
5
5
4.5
4.5
4
4
20
20
18
18
16
12
3
3
2
3
3
3
3
3
9
9
6
9
Risk Response
Risk avoidance
Risk avoidance
Risk reduction
Risk reduction
Risk reduction
Risk reduction
Risk acceptance
Risk reduction
Risk transfer
Risk reduction
Created by author (2013)
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Data source:
http://companycheck.co.uk
In addition, Listening Ltds profit and loss accounts, balance sheets, capital & reserves,
working capital, and ratios for the period from 2008 to 2011 are listed in appendix B. These
statistics also shows strong financial position of the Listening Limited which is a good sign
for Serco Group Plc.
3. Plan of Action
3.1 Service Description
Serco group is seeking to acquire the Listening Company in order to expand its multi-channel
contact centre services to facilitate public due to the extension of its contact with Docklands
Light Railway. After the acquisition, the Listening Company will be responsible to provide
call and contact centre support services on the behalf of Serco to respond inquiries related to
Docklands Light Railway.
in the service description section refers to performing all duties associated with entertaining
and responding inquiries of people including deaf through telephones, email, mail, fax, posts,
and other media including internet. In addition to providing these services, the Listening
Company will be accountable to perform all management and technical functions to devise,
develop, apply, operate, and organise support service centre solutions. Furthermore, the
Listening Company will also provide additional support to Serco on special short-term or
long-term projects.
3.3 Competition
The proposed acquisition will be non-competitive as Serco is not involved in providing only
call and contact centre services in the UK. The Listening Company will only be acquired to
respond the inquiries related to Docklands Light Railway.
Serco Group will ensure that all stakeholders (board members, stockholders,
management of both companies, investors etc.) agree on the strategies defined for the
acquisition process
All mandatory equipment will be contract furnished property
Client benefits: the resultant task sequence will be recommended by Serco which will
consequently allow the Listening Company to effectively handle the public queries
Establishment of multi-channel call and contact support centre: this will enable Serco
to make available a single efficient customer service portal to timely resolve the issues
Serco Group will establish the business plan drivers as it is very important to convert
task order
Subcontracting: The Listening Company will be allowed for subcontracting. Serco
will approve the ultimate plan after evaluating the offers of the potential
subcontractors.
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The above analysis through NPV method illustrates the feasibility of acquiring the Listening
Company.
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References
Aksin, Z., Armony, M. and Mehrotra, V. (2007). The Modern Call Center: A MultiDisciplinary
Perspective on Operations Management Research. Production and Operations Management.
16(6), pp. 665-688.
Cartwright, S. and Schoenberg, R. (2006). 30 years of mergers and acquisitions research: Recent
advances and Future opportunities. British Journal of Management, 17(S1), pp. 1-5.
Doukas, J. and Petmezas, D. (2007). Acquisitions, Overconfident Managers and Self-Attribution Bias,
European Financial Management, 13, pp. 531-577.
Engelbeck, R.M. (2001). Acquisition management. Management Concepts
Hambrick, D. & Cannella, A. (2004). CEOs who have COOs: Contingency analysis of an unexplored
structural form.. Strategic Management Journal, 25(10), pp. 859-979.
Hamel, G. (1991). Competition for competence and inter-partner learning within international
strategic alliances. Strategic Management Journal, 12(S1), pp. 83-104.
Hitt, M., Harrison, J. and Best, A. (1998). Attributes of successful and unsuccessful acquisitions of US
firms. British Journal of Management, 9(2), pp. 91-114.
Howard, M. (2007). Accounting and Business Valuation Methods: how to interpret IFRS accounts.
Elsevier
Kogut, B. (1988). Joint ventures: Theoretical and empirical perspectives. Strategic Management
Journal, 9(4), pp. 319-332.
Marks, M. & Mirvis, P. (1998). Joining forces: Making one plus one equal three in merger,
acquisition, and alliances.. San Francisco: Jossey-Bass.
Rao, K. & Sanker, K. (1997). Takeover as a strategy of turnaround. Mumbai: UTI.
Shleifer, A. & Vishny, R. (1994). The politics of market socialism.. Journal of Economic
Perspectives, 8(2), pp. 261-297.
Calvert, N. (2004). Handbook of Call and Contact Centre Management. Gower Publishing, Ltd.
Cartwright, S. & Schoenberg, R. (2006). 30 years of mergers and acquisitions research: Recent
advances and Future opportunities. British Journal of Management, 17(S1), pp. 1-5.
Gaughan, P. A. (1999). Mergers, acquisitions, and corporate restructurings. New York: John Wiley
and Sons.
Hambrick, D. & Cannella, A. (2004). CEOs who have COOs: Contingency analysis of an unexplored
structural form.. Strategic Management Journal, 25(10), pp. 859-979.
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Hamel, G. (1991). Competition for competence and inter-partner learning within international
strategic alliances. Strategic Management Journal, 12(S1), pp. 83-104.
Hitt, M., Harrison, J. & Best, A. (1998). Attributes of successful and unsuccessful acquisitions of US
firms. British Journal of Management, 9(2), pp. 91-114.
Huber, G. (1991). Organizational learning: The contributing processes and the literature..
Organization Science, 2(1), pp. 88-115.
Kogut, B. (1988). Joint ventures: Theoretical and empirical perspectives. Strategic Management
Journal, 9(4), pp. 319-332.
Malmendier, M. and Tate, G. (2008). Who makes acquisitions? CEO overconfidence and the markets
reaction, Journal of Financial Economics, 89, pp. 20-43.
Marks, M. & Mirvis, P. (1998). Joining forces: Making one plus one equal three in merger,
acquisition, and alliances.. San Francisco: Jossey-Bass.
Rao, K. & Sanker, K. (1997). Takeover as a strategy of turnaround. Mumbai: UTI.
Reuters (2013). Serco Group PLC: Docklands Light Railway Contract Extension. Reuters.com, 07
January 2013.
Serco Group (2013b). Vision and Strategy of Serco Group Plc. [online]. Available from:
http://www.serco.com/about/vision/index.asp [Accessed: 05 March 2013]
Serco Group (2013b). Serco Group Plc About us [online]. Available from:
http://www.serco.com/about/index.asp [Accessed: 05 March 2013]
Shleifer, A. & Vishny, R. (1994). The politics of market socialism.. Journal of Economic
Perspectives, 8(2), pp. 261-297.
Vermeulen, E. and Barkema, H. (2001). Learning through acquisitions. Academy of Management
Journal, 44(3), pp. 457-476.
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Appendices
Appendix A
Table A1: Key Statistics of Serco Group Plc
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Anticipated Target
Performance
Reporting
Frequency
Quality Assurance
Service delivery quality (through telephone)
Monthly
Monthly
Customer Satisfaction
Customer survey for assure call quality
Maximum (99.9%)
Monthly or
Quarterly
Monthly or
Quarterly
Monthly or
Quarterly
Daily or
Weekly
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Appendix B
Key financials of Listening Limited
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