Lastly, AT&T must examine their capital structures and determine how the acquisition will increase value for the stockholders. They must also keep in mind their intent and come up with joint agreements with Kmart so that there are minimal conflicts between the two companies. Contracts and agreements must be signed with appropriate personnel present and inline with regulations mandated by the SEC and other prominent government entities. They will conduct a 90 day synergy analysis after the acquisition to determine the effects. This entire process will take money; therefore, AT&T will look into establishing a line of credit with the prearranged financial institution of a predetermined amount in order to implement acquisition plan. This long term debt will not mature until 10 years since inception with a interest rate of 6.89%.
Aside from the three phases, we are aware that one of the largest and often least examined areas of exposure in acquisitions is that of risk management and insurance. A transaction by AT&T without insurance can instantly turn assets into large liabilities. A transaction without adequate due diligence of risk management practices and scope of coverage is a potential disaster. In addition, the acquirer may be missing an opportunity for price reducing leverage. It is critical to address the risk management issues in all asset or stock purchase agreements. Again, we recommend that outside sources to be used.