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Introduction
ACME should use a technical approach to acquire a company and manage its resources. This strategy involves analysis of the past behavior of exchange rates to identify the pattern and generate a forecast (Picasso et al., 2019). Making a chart of the patterns makes it possible to figure out what will happen. In addition, this method uses data from positioning surveys, trade rules based on moving averages that look for trends, and the customer flow of Forex dealers (Picasso et al., 2019). Due to the fluctuations of countries’ exchange rates, using the history of the rates becomes the most appropriate option. Therefore, a technical approach will enable ACME to understand the previous performance of the country regarding exchange rates and decide.
The Principles of Valuation for Financial Assets and Securities
The first principle is that the current value of the predicted cash flows determines the value of any financial asset. In most cases, a company’s value is based on how much money it will make in the future (Tastulekova et al., 2018). This means the company’s past earnings before the valuation date. Using this principle, one can use the existing financial asset of the organization to be valued to determine its worth (Tastulekova et al., 2018). As a result, ACME will use it to estimate the value of financial securities like stocks and bonds.
The second principle is that value is influenced by the transferability of future cash flow. The company’s value will depend on how easy it is for a potential buyer to take over its cash flows (Tastulekova et al., 2018). Most valuable businesses run without the owner being in charge. If a business owner has a lot of power over how services are delivered, how sales grow, and how customer relationships are kept up, then the owner will keep the goodwill but not the business. Therefore, this kind of individual goodwill has little or no market value, and it is hard to be given to someone else.
The third principle is that the value is influenced by liquidity. The approach is based on the theory of demand and supply (Tastulekova et al., 2018). If there are a lot of possible buyers in the market but only a few good acquisition targets, valuation multiples will rise. In both open market and notional valuation situations, the value of a business interest increases when it is easier to purchase and sell. To get the best price, owners of a business need to bring the best possible buyers to the table. Thus, an organization is considered valuable when it can run its daily operations.
The Best Country as a Site for an Acquisition
Based on the popularity of the pound in the foreign exchange market, I would recommend the UK as the best country for acquisition. It has minimal price volatility and a strong market in the ACME sector. The sterling pound, the oldest actively traded currency on the foreign exchange market, has a long and illustrious history (Djemo et al., 2021). The fact that London is one of the most important financial centers in the world further contributes to the city’s widespread appeal. Therefore, it would be a good decision for ACME to consider acquiring a company that operates in the UK. The country provides a conducive environment for ACME to function effectively.
References
Djemo, C. R. T., Eita, J. H., & Mwamba, J. W. M. (2021). Predicting foreign exchange rate movements: An Application of the Ensemble Method.Review of Development Finance, 11(2), 58-70.
Picasso, A., Merello, S., Ma, Y., Oneto, L., & Cambria, E. (2019). Technical analysis and sentiment embeddings for market trend prediction.Expert Systems with Applications, 135, 60-70.
Tastulekova, A. B., Satova, R. K., & Shalbolova, U. Z. (2018). Business valuation and equity management when entering the IPO market.European Research Studies, 21(4), 875-886.
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