Assume you are the Chief Executive Officer of a publicly-traded conglomerate with five separate operating units. Each of these units is in the industrial sector of the USA economy, with very limited international business. These operating units consist of automotive parts manufacturing, oil field supply, medical supplies manufacturing, transportation, and agricultural chemical manufacturing.

Your company has a market value (i.e. market capitalization) of thirty billion dollars. The companys stock trades at eleven times trailing earnings and twelve times projected earnings and has a Beta of .95.

You are considering the purchase of a smaller publicly-traded company that is in high tech. The potential acquisition centers its activity on servicing the cloud. The company has a market value of five billion dollars, and its stock trades at seventy-five times trailing earnings and twenty-five times projected earnings. It has a Beta of 1.73.

As the Chief Executive Officer, what factors would you consider prior to making your decision to purchase, or not purchase, the smaller company? List five factors to be considered. Write a separate section of three or more pages on each factor, citing at least three peer-reviewed references per each factor/section. Possible factors to consider may be, or may not be 1) the purchase mechanism (i.e. cash, stock or a combination of the two) and the impact upon the capital structure of the conglomerate; 2) the impact upon the risk profile of the company; 3) management integration; and 4) the amount of Goodwill that may or may not be placed on the books of the parent company where you are the CEO. These factors are merely representative of multiple factors that you may or may not consider and are not presented as factors that must be considered for the purpose of this paper.