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Levwell shareholders will likely have high power and high interest.

They will have high power as they are able to influence the acquisition decision. Levwell needs to take care to please the institutional investors as these hold 80% of shares.

They have high interest as they will be concerned as to how the acquisition will impact their returns. They will likely be concerned about the worsening gearing ratio and how the additional interest payments will affect profits and subsequently the amount of dividends paid.

Levwell should consult the shareholders by calling a general meeting, present the findings of the due-diligence and explain the impacts the acquisition will have on profits. The shareholders should then have a chance to vote on the decision - this is to ensure that the shareholders feel involved and to avoid shareholders suddenly selling shares and causing the price to drop

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Dulit employees are likely to have low power and high interest.

They have low power because the employees have no control over the acquisition however Dulit should still listen to their concerns / worries.

They have high interest as they will likely be worried about job security and the impact that any changes Levwell implements will have on their day to day role.

Levwell should drip-feed changes slowly over time to avoid causing stress to their employees about change and thus worsening staff moral and increasing staff turnover

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The power of shareholders is dependent on their shareholding. 80% of Levwell's shares are owned by institutional shareholders, and these will have the highest power. This is due to them having the most voting rights meaning they will have a large say on decisions. All shareholders however will have a high interest as they will want to ensure they still have a return on their investments. As such, for the key shareholders who have both HP and HI, Levwell should engage with these shareholders and ensure they approve of the plans of acquisition. They should ensure however, all shareholders are made aware of the acquisition at the same time due to the implications it could have on share price as a listed company.

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Livewell guests will have a low interest in the acquisition process. Although they would require no disruptions to the quality service provided.

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The Dulit guests will also have little power over the acquisition but will have a higher interest in comparison to Levwell guests. This is due to it being Dulit who is getting taken over. Dulit guests will want to ensure the quality they are used to will not drop. As such, the approach of keeping them informed should be taken and ensuring the guests understand the implications of the acquisition.

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Dulit guests are likely to have low power and high interest.

They have low power because they are unable to impact decision-making - although if they stop returning this would cause an impact as the customer satisfaction and revenue streams would decrease.

They have high interest because they are keen to know if the acquistion will impact the service they are used to receiving.

To manage these stakeholders Levwell should be open and honest in communicating the acquisition and only implement changes if the customer service is not impacted or improved.

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The guests of Levwell will have little interest in the acquisition as the Levwell hotels will not be changing. Furthermore, they will have no power over the acquisition. This means Levwell can carry on as normal with the Levwell guests, ensuring their standard of work does not drop from the pre-acquisition standards keeping their guests happy.

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Employees likely to have high interest but medium to low power because it could directly impact their job security and career opportunities and they could be concerned with it leading to a restructure with redundancies. Therefore Levwell should keep employees informed and consult with them to help with uncertainty and resistance

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Levwell guest are likely to high low power and low interest.

As they are staying in the Levwell hotels the fact that Levwell has acquired Duilit is likely to have minimal change for them. In addition any change would be to cause synergies and would ideally have a positive impact on guest experience.

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Dulit employees are likely to be more interested in the acquisition and the consequences as their company procedures are more likely to be impacted.

If the employees are dissatisfied with their jobs this may impact the service provided to the guests. Therefore communication is key.

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Similarly to Levwell, the employee's of Dulit are going to have little power over the acquisition. However, as it is their employer being taken over they will have a high interest, this will be primarily with regards to their job security. The approach for Dulit should been to keep them informed of the process of the acquisition and the implications of it.

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shareholders are likely to have high power and high interest in the acquisition as they have voting rights and so this could impact the value of their investment. Therefore Levwell should manage them closely by providing regular information about expected benefits and significant decisions

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Levwell employees will have little interest in the acquisition as many only work at the company for a short stint shown by their high employee turnover rate. They also have little power over the decision making of Levwell. As such, Levwell should look to keep educate their employees about the basic information of the acquisition. They at most need to ensure their quality of work does not drop post acquisition.

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Do them in order of confidence! Grab the easy marks first

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Levwell will have to make regular payments creating long term commitment potentially reducing future profits and cash flows

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This will not cover the full value required so further fund raising will still be needed.

more shares will dilute the share value, this might upset shareholders.

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Raises immediate cash helping fund the acquisition without taking on additinal debt which could increase Levwells gearing above industry average

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A rights issue in the short term will be cheaper, there will be no fixed interest payments associated with this. The firms dividend policy will determine the outflow of funds needed.

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Levwell do not need to sell all of their properties in this scenario meaning they will still have the ability to take out debt against their remaining owned properties.

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The leaseback appears as a liability in the balance sheet which would negatively affect the gearing of Levwell.

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If the right issue is not taken up by Levwell shareholders, then the purpose of raising capital via this means would be defeated.

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Rights issue involves significant transactions along with legal and admin costs it can therefore be time consuming for Levwell to arrange

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Provides a less risker option as there is no obligation of regular payments as there would be with interest on loans.

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Existing shareholders are given the chance to purchase the shares at a discount which would dilute the value of the shares of Levwell. However, if they opt to not purchase, the individual shareholders share of control will be diluted as additional shares would be given to the public.

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This is a less risky option as there is no capital repayment. Furthermore, there is no obligation to pay dividends. This may appeal to Levwell management as it keeps their liquidity healthy.

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The loan is secured on the existing hotels. This could be considered extremely risky as if cashflow issues cause them to default, they could lose their property.

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Eventually Levwell will have to pay the capital back on the loan and not just the interest. This will have a significant adverse affect on the cash flow of Levwell which the key shareholders may not be a fan of.

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Taking on more debt would increase Levwells gearing suggesting more risk to it's shareholders. Additionally they will incur increased interest payments which would reduce the profits/dividends for it's shareholders.

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Debt is typically considered cheaper than equity so a loan might be viewed as less costly. Control stays with the hotel, a loan doesnt give up any ownership or power in the company.

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Taking out additional debt will impact the gearing of Levwell. Their current gearing is below the Essland average of 37% but with this financing option they will be above the average. This could impact the investors and they ma demand more reasssurance

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Currently Levwell have a low gearing ratio of 21.5% which would suggest they have the capacity to take on additional loans. This could mean that a loan would be the best option of securing finance.

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Using a bank loan to finance the acquisition would avoid diluting shareholder ownership in Levwell. This would likely be looked upon favourably by shareholders as they can maintain their ownership stakes in the company.

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Increased gearing = high financial risk = risk of insolvency

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New loans are a quick and easy source of capital. Levwell has a favourable gearing ratio versus the industry average so it has the capacity to take on more debt and perhaps at favourable rates compared to companys with higher gearing.

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Taking out a new loan will increase Levwell's gearing ratio as the level of debt within the business will increase. This means that the business will become more risky as they will have increasing debts that need to be covered by their equity. This signals to shareholders that the business may struggle to pay back what they owe, which could lead to lower amounts of investment.

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This form of financing is relatively cheap as the interest rate is not much higher than the current loans in Levwell. This will benefit the company and shareholders as it won't impact the equity