Valhalla: Analysis - Case Study Example

One of the major risk factors pointed out is that the management is old and unproven. The CEO is too old, that is about 70 years, and the CTO is his son. However, as far as Telco Exchange agrees to change the CEO and appoint someone who is suggested by Valhalla, this risk is solved to a great extent. The scope of the field Telco Exchange is engaged in is evident from the Aberdeen finding that while the average profit of a Fortune 500 company is 1% of its revenue, the money the company spends on telecommunications is around 0.84% of the total amount. So, as far as Telco manages to provide highly integrated and comprehensive solutions, there will be growth, or, at least, the business will not go down. Though there is a possibility that some financially able competitors like MSS Group, Teldta Control, Profitline, and QuantumShift may try to develop software solutions, they will address only the financial part of the issue, thus failing to address inventory management and service order. So, there is no possibility of any serious threat to Telco Exchange shortly. Hence, Art Marks can vote to invest in Telco Exchange.

The biggest risk factor facing Telco Exchange at present is the fact that in the future, it may face serious competition from its competitors. Well-funded companies may try to develop software solutions. The second risk is that vendors who specialize in financial management may develop more comprehensive and robust product offerings. Some companies that try to address invoice processing through software solutions or a manual outsourced approach are Tangoe, Stonehouse Technologies, Teldata Control, Profile, and QUantumShift. However, as the companies know, these are not complete solutions as they do not address the root cause of the problem. On the other hand, Telco Exchange offers a much more comprehensive and integrated solution that identifies the root causes and the unnecessary services and equipment. It also helps prevent erroneous ordering and make sure that the elements which are not needed are eliminated. In addition, it provides a holistic view of the communication infrastructure of the companies. Furthermore, Telco Exchange helps automate the ordering process, thus making the data available for all parties to work with. This helps to ensure that the corporate policies are properly followed. Thus, it becomes evident that the outsourcing approach will not provide a solution that is as effective as that of Telco Exchange, and hence not a risk.

The third risk is that the present management is unproven, with a CEO aged 70. In addition, the CTO is his son. It is necessary for the company to change the existing management, however, without any effect on the existing customers and performance.

The Valhalla due diligence is perfect in the fact that though it may fail to provide huge profit through investment based on wild assumptions, it takes maximum care on not losing the investment. Thus, investors are offered an investment that is free from risk to the maximum possible extent. The investment decision is taken after duly studying the investment memo, and to take the decision, the whole board should vote unanimously; not based on the majority. This ensures that all issues and risks concerning the investment are fully analyzed and not even a single minor factor is left unattended. In addition, once the company takes the decision, it is followed by finance and research assistance followed by critical moves which are meant to ensure that effective steps for the proper functioning of the firm are taken. In total, it seems that the due diligence strategy is ultimate in ensuring safety to the investment. The only drawback associated with this due diligence is the fact that the ‘overcautious’ approach leads to a considerable narrowing in the scope of investment as investment always means risk. In addition, there is a lot of time consumed by the analysis.