Satelite Distribuidora de Petroleo - Case Study Example

From the high-interest rate expenses, SAT may face liquidity problems and risks. This risk will make SAT lack sufficient funds to facilitate its ongoing operations The main drive towards investing is the desire to create value. Therefore, some of the financial issues that Darby would be concerned about are the future returns that this investment will earn it. In addition, it will be concerned about the initial investment cost and the shareholding. Besides, Darby will study the past financial performance of SAT through both trend and ratio analysis in order to make an informed decision.

The legal issues to be considered revolve about the nature of the relationship being created with regard to the Brazilian Company Law. This will involve issues to do with the minimum shareholding and control, rights and duties of each party. Closely to this are the governance issues that Darby will have to consider. I order to ensure that its interests were taken care of, it could be concerned that it is represented by demanding key executive positions and board seats (Applegate and Minardi).

Darby is likely to reap immensely big by investing in SAT. This will arise from the already proven track record, and milestone SAT has taken to be among the most reputable firms in this industry (Applegate and Minardi). This gives rise to goodwill, which further assures it of continued market expansion and customer loyalty. Its team of able and strategic-minded executives has been screening the market for new opportunities and has diversified SAT’s single commodity to a line of them. In itself, this presents, SAT as a unique investment opportunity.

The continued growth and expansion will make the SAT’s stock to increase in price thereby maximizing Darby’s value in it. However, there are also costs and losses related to this investment. The major losses that Darby stands to face when it invests in SAT are associated with the financial risks. These