Crafting a Statement of Cash Flows: Preferred Airline Group Corporation Buys West Coastal Air, Inc.

7 Pages Posted: 9 Jul 2019

See all articles by Mark E. Haskins

Mark E. Haskins

University of Virginia - Darden School of Business

Abstract

Marsha Alstone was fascinated with mergers and acquisitions. She had been following the news of Preferred Airline Group Corporation's (PAG's) interest in, offer for, and 100% acquisition of West Coastal Air, Inc. (WCA). When the deal closed on December 2, 2018, just a few weeks before PAG's fiscal year-end, she found herself wanting to develop, on her own, the consolidated statement of cash flows (SCF) for the year during which the WCA deal had closed. She wants to know in what ways the acquirer's postconsolidation financial statements changed in comparison to those from the year prior to the acquisition.

Excerpt

UVA-C-2427

Jun. 26, 2019

Crafting a Statement of Cash Flows:

Preferred Airline Group Corporation Buys West Coastal Air, Inc.

There was no mistaking that Marsha Alstone was fascinated with mergers and acquisitions (M&A). She was always intrigued by which company stepped into the role of acquirer and which company, willingly or not, assumed the role of acquiree. Her curiosity was almost unquenchable. She needed to know why one corporate “marriage” worked out and another did not. What were the related M&A stories presented in the company's press releases and hidden therein between the lines? And how many times did those press releases mention synergies? Why did the deal happen when it did and not sooner, not later? How did the acquirer determine the price it ended up paying? Was the acquisition defensive, offensive, or both? Were there other active bidders in the arena or presumably lurking on the sidelines? Was the acquiring company an experienced acquirer or was this its first significant foray into the M&A arena? What were the industry analysts opining about the deal's prospects and pitfalls? Which of the corporate executives from both companies got to stay on after the deal closed and which had to, or chose to, leave? Did those departing executives go to a competitor, and did they go quietly? How much was their severance package? And, in what ways did the acquirer's postconsolidation financial statements change in comparison to those from the year prior to the acquisition?

At the moment, it was this last question that was occupying her time and attention. She had been following the news of Preferred Airline Group Corporation's (PAG's) interest in, offer for, and 100% acquisition of West Coastal Air, Inc. (WCA). The acquisition was rumored during the previous winter, announced in the spring, and closed on December 2, 2018, just a few weeks before PAG's fiscal year-end. Alstone had some of the related PAG financial data (Exhibit 1), but she found herself wanting to develop, on her own, the consolidated statement of cash flows (SCF) for the year during which the WCA deal had closed.

. . .

Keywords: systems integration, balance sheets, comparative financial information

Suggested Citation

Haskins, Mark E., Crafting a Statement of Cash Flows: Preferred Airline Group Corporation Buys West Coastal Air, Inc.. Darden Case No. UVA-C-2427. Available at SSRN: https://ssrn.com/abstract=3416905

Mark E. Haskins (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924 -4826 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/haskins.htm

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