Landmark Facility

Solutions
1. Does Broadway benefit from acquiring Landmark Facility Solutions?
How can Harris Justify a $120 million bid for Landmark?

 The industry was very fragmented with many small private players and they were very competitive
 The value or synergy can be created in the following ways:
 By engaging economics of scale – cost synergy
 They wanted to offer a compelling value proposition and help realize premium pricing – Revenue synergy
 Bundling contracts helps facility managers to improve client relationships, secure larger contracts and increase brand recognition
 It will also help in diversification of services
 Valuation of broadway in an optimistic Scenario is $183 Mn and hence $120Mn is justified
 [Working attached]
2. If Broadway proceeds with the acquisition which financing
alternatives should be chosen, and why? How Broadway would be
servicing its debt after the acquisition.

 Analysis needs to be performed with both debt and equity cases.

 In general the capital structure would not affect the valuation
3. Does Broadway reduce shareholder value if it selects the mix of debt
and equity financing alternative? What is the cost of equity dilution?

 The control of equity holders is diluted when the company issues stock to the new stockholders
 Existing stockholders are concerned when the company issues new shares
 Hence there will be a reduction in value