I think the estimated value is conservative. This is because John Liedtke is leveraging on the strength of Mercury Athletics Footwear and that of Active Gear for to project growth rather than heavily investing in the more promising men’s athletic line of products and expecting huge returns. His is not read to take huge risks either and his approach is a rather cautious one and the growth projections after acquisition is substantial, more feasible and compares favourably with that of Active Gear as mentioned by the unemployed professors. He intends to preserve the all the segments of Mercury Athletics Footwear and not phasing out. Aggressive valuation approach on the contrast has a high risk tolerance characteristic and in this case could have resulted in a complete overhaul accompanied by heavy capital investments.
Other than base-line assumption and valuation, synergy analysis can be done based on a variety of factors. These include tax margins, costs, revenues and advantages such in form of managerial, tax advantages and size increase. Combined corporate entities stand to benefit from larger revenues than those generated individually and possibly with even lower operation costs and expenses. For instance according to the unemployed professors it is possible that Mercury Athletics Footwear Inc. may be seen as not taking advantage of its distributed supply chain and therefore it is possible that it could greatly benefit from a merger with a corporation whose managers have good negotiation and marketing skills.
Synergies form mainly to take advantage of either sides strengths, profit margins of Mercury Athletic Footwear, for instance, could be attributed to its highly discounted and lowly priced products and hence a synergy with another company with would double the size and possibly increase their profitability. Other sources of value that can’t be quantified could be customer loyalty and reputation of the company; a reputable company with a loyal customer base has great potential of growth which could be only impeded by poor management or lack of proper skills. Kindly reach out to the unemployed professors