Paragon Tool

For Paragon Tool CEO Nicky Anaptyxi, concerns over the potential acquisition of MonitoRobotics are certainly warranted. The board, hired consultants and even Nicky himself appear to be completely split on the decision. From case facts, there are three possible courses of action for Paragon Tool: (1) acquire MonioRobitics to accelerate the development of manufacturing service software and ward off competitor Bellow & Samson; (2) forego the acquisition and organically grow the company’s own services division; and (3) follow the advice of CFO William Littlefield and divest the yet profitable services division altogether. A fourth option – growing the company in other ways by acquiring or merging elsewhere – but there is not enough information in the case facts to discuss the legitimacy of this strategy. Furthermore, without detailed financial and industry information, it is impossible to determine whether selling the unprofitable services division would be the correct course of action either. As such, this report will focus on whether Paragon Tools should acquire MonitoRobitics or grow its business organically, based on the facts presented in the case.
First, it is important to look at the deal from the perspective of the business life cycle. As Nicky mentions, MonitoRobitics is a fast-growing business. Its technologies demonstrate significant potential, but are far from fully implemented. The case mentions the possibility that the software technology of MonitoRobotics will become the industry standard, indicating that the company – and in fact, the entire industry – are in the growth stage of the business life cycle. Indeed, this shows why MonitoRobotics is such a prime target for acquisition. The case facts indicate that several of Paragon’s competitors are already involved in the manufacturing services industry (making market domination unlikely), but the optimistic perusal of the technology of MonitoRobotics would give