More Related Content Similar to PwC Case Study (1) Similar to PwC Case Study (1) (20) PwC Case Study (1)2. © 2016 PricewaterhouseCoopers Sustainable Solutions 2
Purpose: To provide a basis for Greenlight’s decision on acquiring RubberUp or
investing in the development of a tire recycling practice.
PwC Services
Accounting
Implications
Balance
Sheet Change
Sustainable
Solutions
Current
Situation of
Greenlight
Agenda
3. © 2016 PricewaterhouseCoopers Sustainable Solutions
Company Profile: Greenlight
• “At Greenlight, we make tires that keep America
moving.”
• “Built at Greenlight for Greenlight”
• Greenlight 2030
• Incorporated in Delaware and headquartered in
Mississippi.
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Current Situation of Greenlight
4. © 2016 PricewaterhouseCoopers Sustainable Solutions
• Greenlight produced tires that were found in protected
wetlands along Mississippi River.
• Facing $5 - $10 million in fines and $15 million for
restitution.
• Need to put sustainability at the center of your business
practices
• Greenlight plans to develop a business to recycle used tire rubber
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Current Situation of Greenlight
Current Concerns
5. © 2016 PricewaterhouseCoopers Sustainable Solutions
• Two different options moving forward:
• Increase Research & Development efforts to implement this
idea
OR
• Acquire RubberUp, an existing business that already has
many of the industrial aspects and technology required.
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Possible Responses
Current Situation of Greenlight
6. © 2016 PricewaterhouseCoopers Sustainable Solutions
• Privately held company based and incorporated in
Atlanta, Georgia
• Manufactures rubber-based products from recycled
tires.
• Has a strong presence in the market for sustainable
and environmentally conscious products.
• Originally served only businesses but has recently
expanded to serve consumers.
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Company Profile: RubberUp
Current Situation of Greenlight
7. © 2016 PricewaterhouseCoopers Sustainable Solutions
Solution to the Problem
• Our Considerations
• Current Ratio - Measure of the ability to pay short & long term
obligations
• Large cash sums are necessary for potential legal problems
• Maximization of Net Income is important in looking at potential
reinvestment in the future
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Sustainable Solutions
Decision: Acquire RubberUp to improve your sustainability efforts.
8. © 2016 PricewaterhouseCoopers Sustainable Solutions
Changes on The Balance Sheet
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• Changes from 2015 to 2016 in the Balance Sheet
• Cash decreased
• Inventories increased
• Goodwill increased
Balance Sheet Change
Cash
$1.49m
Current
Ratio
0.23
9. © 2016 PricewaterhouseCoopers Sustainable Solutions
Corporation Tax By State
• Corporation Tax - tax on the income or capital income
of corporations
• Tax benefit from acquiring RubberUp due to lower tax
scenario
• Lower tax rate in Mississippi
• Sustainable company
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GA
6.00%
MS
5.00%
DE
8.70%
Accounting Implications
10. © 2016 PricewaterhouseCoopers Sustainable Solutions
Accounting Considerations
• Proper accounting procedures for an acquisition
• Goodwill Impairment
• Acquisition Premium (25% Premium)
• Depreciation & Capital Expenditures
• Other considerations
• Acquisition charges
• Research & Development to be expensed or capitalized
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Accounting Implications
11. © 2016 PricewaterhouseCoopers Sustainable Solutions
• PwC’s Services that will assist you in the future:
• Financial Due Diligence
• Mergers & Acquisitions
• Tax Exposure
• Valuations
• Strategic Sustainability
How can PwC help
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PwC Services
12. © 2016 PricewaterhouseCoopers Sustainable Solutions
A Look Ahead for Greenlight
• Final recommendation by PricewaterhouseCoopers
• Acquire RubberUp
• Action should be taken immediately
• Within two weeks alert the firm if you will be accepting the
proposal and acquiring RubberUp.
• Acquisition will occur immediately and the firm will be present for
the next six to twelve months to ensure a successful transition.
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13. © 2016 PricewaterhouseCoopers Sustainable Solutions
References
PricewaterhouseCoopers, P. (2016). Mergers, acquisitions, dispositions, IPOs. Retrieved November 14,
2016, from http://www.pwc.com/gx/en/services/tax/mergers-and-acquisitions.html
PricewaterhouseCoopers. (2016). Greenlight. Retrieved November 16, 2016, from
http://greenlight.pwc.com/
PricewaterhouseCoopers. (2016). PwC on Sustainability. Retrieved November 14, 2016, from
http://www.pwc.com/us/en/corporate-sustainability-climate-change/pwc-on-sustainability-c-
suite.html
PricewaterhouseCoopers. (2016). PwC's careers site for students. Retrieved November 14, 2016, from
http://www.pwc.com/us/en/careers/campus/why-pwc/firm-facts.html
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Editor's Notes Austin rieck AUSTIN RIECK ALEXA
Hint at problem of sustainability
“At Greenlight, we make the tires that keep America moving“ SAM
Sustainable to businerss operation to recycle your tires in a more efficient Sam
SAM
Align with our… core business principle Parker Parker ALEXA
taxation/exposures PARKER RIECK
Cannot!!! Provide all services due to litigation and legality, however here are the many options of services which we can provide
global accounting differences, regulatory requirements, foreign and domestic tax considerations, and the impact the acquisition will have on its financial reporting
We help clients Accelerate the transition® and achieve rapid integrations that fully realize desired synergies and allow them to return to a "business as usual" environment as quickly as possible after a deal. SAM So we’re giving the greenlight for this acquisition VERBAL CALL TO ACTION
So, on conclusion we at PwC recommend Greenlight acquire RubberUp to improve overall net income and liquidity. We at the firm believe that our analysis shows that this is the best option for Greenlight
Then just explain the timeline
End with
In conclusion we are giving the Green light for this acquisitoin