James Ruesch

Fresh Choice Case Write-Up

MGT-6685
01/30/2014

Why do you believe Fresh Choice bought Zoopa? Assumed from the case, one of the
reasons they ultimately bought Zoopa was the perceived value of the synergies. They
specify multiple synergies such as industry segment, menu, location, and valuable culture to
incorporate into their company. Mark James lecture identified this as a potential pitfall
and recommended not including this method of valuation in the decision to acquire or not.
He identified people and culture as the main focus, like the Human Due Diligence model,
and obviously actual value of assets and capital being brought in. In light of their valuation
model apparently including these synergistic payoffs, along with the locations and tangible
assets, the deal was just too good of a deal to pass up. This great deal was the ultimate
reason for the acquisition.
Who is to blame for the less than optimal integration of the two companies? Fresh
Choice bears the ultimate responsibility as the financial acquiring entity for the results of
the merger. It was their job as the buyer, to do the due diligence in terms of completely and
accurately analyzing and evaluating the advantages and challenges of the merger. They did
not identify how to acquire the desired cultural aspects from Zoopa and did not successfully
maintain the key talent they had identified. They also didnt seem to recognition the
magnitude of the differences in their value creation strategies.
If you could go back in time to advise the Fresh Choice Management team, what would
you have advised they do before the announcement of the acquisition? Fresh Choice
overlooked the communication of what was going on to the Zoopa personnel. Done
properly including a more finely detailed take-over strategy, the communication could have
been aligned with the goal of acquiring some of the Zoopa culture and helped to smooth at
least some of the rough edges in the process. This may have helped them to maintain some
of the key talent After the announcement of the acquisition? At this point, with Fresh
Choice better prepared for the announcement and already in transition, I would have
implemented some changes to better control transitioning the operational effectiveness
strategy into Zoopa while allowing time to acquire some of the desired cultural strengths
that still had a place in a culture of predominantly operational excellence. Would you have
even recommended an acquisition? Yes. The merger was ultimately defined a success
rather than a failure. Given that they did not end up losing money financially and even were
able to develop some successful spinoffs from the acquisition, it did not hurt them overall.
There was a lot of opportunity for growth and improvement in the process that did not
occur, but as Peter Ashley pointed out in the case, no matter how they looked at it, they still
got a great deal, even excluding value they had hoped for but not received. It is possible
that the focusing effort and investment instead on in improving themselves may have
proved more fruitful, but I feel that value provided as a learning experience made the
venture worth it. I would expect Fresh Choice to be more competent at potential future
opportunities as a result of the lessons learned.