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The Anatomy of a Transaction: K2 Incorporated Acquires Fotoball USA
1. How did K2’s acquisition plan objective support the realization of its corporate mission and
strategic objectives?
Answer: K2’s overarching financial objective for an acquisition was to earn at least its cost of
capital. This financial objective dovetails directly with the overarching business objective of
meeting or exceeding its corporate cost of capital of 15%. Its primary non-financial objectives
2. What alternatives to M&As could K2 have employed to pursue its growth strategy?
Why were the alternatives rejected?
Answer: K2 could have achieved some improvement in revenue by entering into a series of
3. What was the role of “strategic controls” in implementing the K2 business plan?
Answer: K2 employed a series of incentive plans and performance monitoring systems to
increase the likelihood that their business strategy would be implemented successfully. The
incentive plans were designed to motivate employees to work towards implementing its
revenue per dealer.
4. How did the K2 negotiating strategy seek to meet the primary needs of the Fotoball
shareholders and employees?
Answer: K2 employed a share for share exchange such that the transaction would qualify as a
tax-free transaction that would enable the Fotoball shareholders to defer the payment of taxes
