Page 24 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Unit 1: Acquisition of Business

14. Excess of purchase consideration over net assets is called: notes
(a) Goodwill

(b) Capital Reserve
(c) Capital Profit
(d) None of the above.
15. If purchase price = ` 40,00,000, Total assets = ` 35,00,000 and Liabilities = ` 10,00,000, value
of goodwill will be:
(a) ` 15,00,000
(b) ` 30,00,000
(c) ` 15,00,000
(d) None of these.



Case Study the saxton management group story
hen your business represents speakers as diverse as Paul Keating, Molly
Meldrum and Cathy Freeman, a background as a teacher might seem unusual.
WIn fact, it has been ideal for Winston Broadbent, who was head of mathematics
and computer science at Melbourne’s Carey Grammar in 1988 when he and his partner,
Nanette Moulton, purchased Saxton Speakers Bureau. Winston (named after Churchill)
says: “In some ways, it was a parallel switchover from teaching to managing this company;
both roles involved staff management, public speaking and good systems.”
Joan Saxton – a well-known, world-championship-winning speaker – established
Australia’s first professional speakers’ bureau in 1965. She managed the business for more
than twenty years. In 1988, Joan Saxton met Winston and Nanette through her children.
The Broadbents wanted a business opportunity and Joan wanted to retire. Winston says:
“Joan has remained a close personal friend. Saxton celebrated 40 years last year and Joan
spoke at the celebration.”

the challenge
Managing expansion and acquisitions.
the solution
One of Winston’s first priorities after buying Saxton was to update the office systems. He
says: “We were using carbon copy books: top copy for the client, a copy for the speaker
and an office copy.” He commissioned a consultant to create tailor-made software to meet
the company’s needs. “We have probably spent more than $200,000 over the years on
upgrading and improving our systems... we are leading edge.” Getting the right systems
laid the basis for expansion.

Saxton has managed a steady 30% minimum annual growth since 1988. Winston says: “Part
of our growth has been organic and part of it has been through acquisition and merging
with other companies.” In 1996, Saxton made its first acquisition, Harry M. Miller’s Speakers
Bureau. Winston says: “He was our major competitor, with a good reputation, but we were
already bigger than he was. We picked up some big names like Rod McGeoch and Bryce
Courtenay, who are still with us.”
Contd...

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