Business Finance And Quantitative Methods Of Dick Smith Holdings

This particular essay attempts to heighten a brief summary of the ownership history of Dick Smith Holdings Limited. It also incorporates the critical evaluation of the valuation of the pany when it was acquired by Anchorage Capital Partners and its Initial Public Offer (IPO) amount. The essay also attempts to assess the ethical dilemmas that face Anchorage Capital Partners regarding the floating of the pany and the senior executives and directors of Dick Smith Holdings Limited in respect to its financial reports made in the 2014/2015 accounts and reports. Dick Smith Holdings Limited was an Australian wide-chain of retail stores domiciled in Sydney, Australia and was founded by Dick Smith in 1968 (Dick Smith Holdings Limited annual reports, 2015). The pany basically sold consumer electronics goods, electronic project kits and hobbyist electronic ponents for its customers in Australia, New Zealand and other parts of the world. The pany expanded effectively into New Zealand and unsucces sful in some other nations globally (Anderson, Sweeney, Williams, Camm, and Cochran, 2012). Dick Smith Holdings Limited expanded to be a leading business in Australia that ensured that almost every electronic enthusiastic in the country has one of its catalogs and thus enhanced profits. In the FY2012, Dick Smith Holdings Limited was formerly acquired by Anchorage Capital Partners at an opening cash payment of AU$20 Million and the total ultimate cost of some AU$115 Million. Dick Smith Holdings Limited was initiated in 1968 by Dick Smith. The pany started as small rented buildings in a car park in the Sydney area of Neutral Bay with the total capital of just AU$610 and focused mostly on servicing and installing car radios (Puncheva, and Michelotti, 2014). Due to the pany rapid increase and success in the business sector, the pany moved to a bigger premises so as to enhance its business operations in the country. The pany profited mostly from CB Radio business, and by the end of ten years, it had branches in all the mainland regions in the country. Dick Smith Holdings Limited was owned by Dick Smith and his wife until they basically sold the majority of shares to Woolworth Limited in 1982 (Clements, 2015). The pany expanded its diverse range of products especially in between 1970 and 1980 and basically stocked products such as TV receiving stations and Heathkit electronic kits because of the waning interest rates. The business had expanded to about 20 sto res and the initiator together with his wife sold 60% of the business shares to Woolworth Limited and the remaining 40% ownership was pleted in 1982. Dick Smith Holdings Limited continued to increase to its setup of small main street stores in the regional and suburbs towns across Australia. The pany later established Dick Smith Electronic Powerhouse which was a superstore across the east coast of Australia that carried an extensive range of products in the audiovisual, puting and armature radio areas to enhance its productions. In the FY2008, following Woolworth Limited review of its consumer electronics division, Dick Smith Electronic Powerhouse revamped its flagship store as a notion to Dick Smith Technology branding (Lau, 2016). In 2009, Woolworth pany Limited confirmed the end of the Dick Smith Electronic Powerhouse as progressively phased out over the subsequent three years as part of its division. Dick Smith Electronic Powerhouse ended its operations in 2016 with several year s of Anchorage Capital Partners acquisition. Dick Smith Holdings Limited had been owned by Woolworth Limited since the early 1980’s, until early in 2012 when Woolworth Limited announced that the business was underperforming and non-core and instigated a sale process (Schauten, Dijk, and Waal, 2016).   After a period of distinctiveness, in November 2012 Anchorage Capital Partner acquired the pany for AU$20 Million. Anchorage Capital Partners announced in FY2012 that it had entered into an agreement with Woolworth pany Limited to acquire 100% of Dick Smith Electronics with the entire transaction anticipated to be pleted in November 2012. Dick Smith Electronics was an iconic Australian consumer electronics pany that became part of Woolworth pany Limited in 1980 (Essayyad, 2012). The deal had been conventionally structured so that Dick Smith Holdings Limited will emerge from the sale supported by a strong statement of financial position with considerable asset backing and no core liabilities. As part of the acquisition, An chorage Capital Partners would also support the operations by offering additional guarantees and cash investment. As at FY2012, Dick Smith Holdings Limited reported sales worth AU$1.6 Billion. Anchorage Capital Partners paid as much as AU$115 Million for Dick Smith Holdings Limited because it was agreed that an approximately AU$20 Million would be paid up front. As at FY2012, Dick Smith Holdings Limited was basically valued at AU$420 Million (Dias, and Saizarbitoria, 2016). The pany was heavily criticized because it was cheaply sold because the pany could not make sufficient profits needed by the pany. Woolworth pany Limited having struggled to find a fit for the electronics retailer from its acquisition in 1980, the pany was keen to offloading the non-core business division for approximately AU$115 Million. Since Anchorage Capital Partners is a privately owned institution, the price details of the newly acquired asset, the pany shares are not routinely made public. When Dick Smith Holdings Limited was basically acquired by Anchorage Capital Partners, the pany had less value and was basically valued at AU$20, and its Initial Public Offer (IPO) was at AU$2.20 per share. Following the pany acquisition, Anchorage Capital Partners restructured its business, and the retailer was mainly listed on the shares market for AU$2.20 for each share raising about AU$345 Million which was more than five times its initial purchase price (Brigham, and Houston, 2012). Anchorage Capital Partners is alleged to have marked down a substantial value of Dick Smith inventories to sell it at a discount so as to report an attractive i es data. These particular adjustments did not touch the new Dick Smith pany loss and profit reports, and at the lash of the pen, the pany had made or avoided about AU$120 Million in future pre-tax profit. The pany financial statements as at 2012 indicated that Dick Smith Holdings Limited had stock that cost AU$371 Million but had been written-down to AU$312 Million (Essayyad, 2014). Consecutively, as at June 2013, the pany inventory had decreased to AU$171 Million which basically pointed out an apparent sale of the enterprise. In this case, the reduction in the pany inventory produced a massive AU$140 Million profits to the pany operating cash flows as a result of selling most of the inventory, but there was no restocking. Due to this particular markdown of most of Dick Smith Holdings Limited inventory and other non-current assets, the pany valuation had been decreased tremendously that enabled Anchorage Capital Partners to acquire the new corporation quickly (Oakshott, 2012). Floating of the business shares in the market is usually the duty of management. Floating of shares often enables the pany to raise more capital to fund its diverse activities such as expansion. The management of Anchorage Capital Partners basically faces diverse ethical dilemmas when floating of shares because of the negative critics that they face as a result of Dick Smith Holdings Limited acquisition in 2012. The pany management is criticized of decreasing the pany value so as to enrich themselves which is considered to be unethical among the pany operations (Iyakaremye, 2015). Anchorage Capital Partners are faced with the aspect of trust and confidence from shareholders in respect to floating of its shares because they feel less secured from diverse operations of the pany. The pany management floated the electronics chains that bear the name of Dick Smith which was considered to lack decency and morality and that the managers were faced with a lawsuit with the aim to refund for t he clients that were left holding worthless gift cards. Dick Smith Holdings Limited was initially sold off to Anchorage Capital Partners for about AU$115 Million, and the privately owned firm basically floated the business just after fifteen months later for more than five times its initial costs. This aspect was considered to be unethical because the amount paid for the pany was too low. There can be absolutely no doubt that the Anchorage Capital Partners Limited managers knew that the things were not doing the right thing to its customers. Investors lost their life savings invested in the pany while the pany directors walked away with several million (Gendron, and Smith, 2015). The Anchorage Capital Partners misled the directors of Dick Smith Holdings Limited that led to their acquisition at a little value whereas the pany management made diverse profits that floated an enormous amount of shares that was considered to be five times the initial value of Dick Smith Holdings Limited. An assessment of the ethical dilemmas that faces the senior executives and directors of Dick Smith Holdings Limited with respect to its financial reports made in the 2014/2015 accounts and reports According to the financial reports and accounts for FY2014/15, the management board of Dick Smith Holdings Limited duped the firm shareholder and investors using the name of Dick Smith to hide their dishonesty (Wood, 2011). They fooled the pany investors and shareholders that the pany was making profits and that the pany financial students and reports demonstrated a clear picture of the pany financial position and in actual aspects, the pany financial statements were deceiving. This action was basically unethical and unprofessional because they also fooled financial professionals and banks to push for the pany sale (Essayyad, 2012). Another ethical problem that faces the directors and executive management is that according to the FY2014/15 accounts and reports, there was no indication that Dick Smith Holdings Limited will exit the business. According to the reports, the managers rewarded themselves with huge bonuses and salaries that resulted to the pany liquation. The pany went into receivership five months after the release of the financial statements of 2014/2015 which indicated that the pany would continue its operations for a foreseeable future but in real aspect, the pany had diverse problems. Due to huge salaries by the directors that resulted in little profits, the pany shares were suspended from trading via the ASX. Senior executives and directors of Dick Smith Holdings Limited were blamed for low sales that led to low profits and hence the closure of the business. Anchorage Capital Partners had altered the true and fair value and projections of the pany when it registered the pany of the Australia Stock Exchange in the FY2013 (Kenney, Cava, and Rodgers, 2016). Basically, it a pany cannot be valued at AU$90 Million in FY2012 by Woolworth Limited, AU$500 Million in 2013 and then the pany goes into receivership two years later. In this case, the pany management deceived the pany shareholders and investors. The senior executives and directors of Dick Smit h Holdings Limited knew of inventory problems that led to most of the pany stocks written off. The management team basically deceived the shareholders, and they were treated poorly, and they had a right to correct information to make informed decisions on the Australian share market. The senior executives and directors of Dick Smith Holdings Limited did not offer viable information to its investors and shareholders that led to the pany closure (Essayyad, 2008). This is because it is believed that the managers had concrete knowledge of what was happening with the pany and failed to advise on the shareholders on the possible approaches to save the pany from downfall. Proper and ethical management of diverse panies globally is usually the core aspect that enhances the pany operations. A pany that has better management team usually generate sufficient profits for its investors and shareholders because they ensure that there is continuous production. Dick Smith Holdings Limited sold consumer electronics goods, electronic project kits and hobbyist electronic ponents for its customers in Australia, New Zealand and other parts of the world. The pany was officially closed in 2016 because the pany management did not disclose all the problems that hindered the operations of the enterprise. The pany management fooled the pany investors and shareholders that the pany was making profits and that the corporation financial students and reports demonstrated a clear picture of the pany financial position and in real aspects, the pany financial statements were deceiving. Anderson, D.R., Sweeney, D.J., Williams, T.A., Camm, J.D. and Cochran, J.J., 2012.  Quantitative methods for business. Cengage Learning. Brigham, E.F. and Houston, J.F., 2012.  Fundamentals of financial management. Cengage Learning. Clements, J., 2015. Stamp duty consequences of infrastructure and development agreements.  Taxation in Australia,  49(11), p.688. Dias, A.A.D.S.P. and Saizarbitoria, I.H., 2016. ISO 9001 Performance: A Holistic and Mixed-Method Analysis.  Revista de Management parat International,  17(2), p.136. 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