Abc Learning Case Study
ABC Learning
An essay By Liam Martin
ABC Learning was established in Brisbane 1988, and operated 18 centres by 1997, by 2006 it owned 800 centres providing roughly 20 per cent of long day care places across Australia (Rush & Downie 2006).). After this strong growth domestically and internationally largely achieved by acquisitions often purchased at inflated prices ABC underwent a tumultuous period exemplified by a sharp fall in its share price. This was the result of an unsustainable level of secured and unsecured debt, a loss of control over cash flow resulting from unprofitable operations and an aggressive acquisitions policy, as a consequence Receivers and Managers were appointed by the principal creditors (Mcgrath,Nicol, 2016). This essay …show more content…
ABC having, started with a single childcare centre in inner city Brisbane in 1988 seized the opportunity and expanded ambitiously by acquiring properties in prime locations and buying out single day-care centres and smaller childcare groups (Teen, 2012). In 2005 ABC Learning established itself United States by acquiring control of Learning Care Group Incorporated the operator of 460 centres (Rochford 2005) as cited in (Rush & Downie, 2006). ABC Learning was also contemplated diversifying into Canada and Asia (Rush & Downie, 2006). Plans t initiate government subsidy scheme similar to the Australian model for child care in Canada made a more attractive prospect (Wiesenthal 2005) as cited in (Rush & Downie, 2006). In 2004 ABC Learning centre merged with the Peppercorn Management Group its principal New Zealand competitor (Leyden, 2004). This merger permitted ABC to boost its New Zealand operations from the 17 childcare centers that it operated, because Peppercorn had management rights for 52 centres within New Zealand. This led to the number of centres under ABC Learning control increasing from 327 to 660 in the financial year ending 2005 (Rush & Downie, 2006). Eventually acquiring 2300 centres across three continents by 2007 (Walsh, …show more content…
These include the problem of an entrepreneur becoming blinded by personal ambition and the desire to be the industry leader and losing sight of the need to adhere to sound business practices especially in the areas of corporate governance and adherence to sound accounting principles. This is especially evident in the need to closely monitor cash-flow and the need to base profit projections a realistic model. In this case share values and profit projections were unrealistically high. The case also highlights the need for lending intuitions and governments to make establish clearer guidelines in regard to lending, in this case money was lent on the basis of projected future earnings. ABC’s collapse also highlights the need for methodology both for providing a realistic assessment of intangible assets and also the need to establish some form or limit in regard to the amount of intangible assists a company can carry on its balance sheet. The payment of child care subsidies to consumers directly in this case parents, is another area that could should be addressed. Payment could alternatively be made to providers after meeting governmental guidelines. The case finally highlights the need for ASIC To be more vigilant act on information from supplied by the
An essay By Liam Martin
ABC Learning was established in Brisbane 1988, and operated 18 centres by 1997, by 2006 it owned 800 centres providing roughly 20 per cent of long day care places across Australia (Rush & Downie 2006).). After this strong growth domestically and internationally largely achieved by acquisitions often purchased at inflated prices ABC underwent a tumultuous period exemplified by a sharp fall in its share price. This was the result of an unsustainable level of secured and unsecured debt, a loss of control over cash flow resulting from unprofitable operations and an aggressive acquisitions policy, as a consequence Receivers and Managers were appointed by the principal creditors (Mcgrath,Nicol, 2016). This essay …show more content…
ABC having, started with a single childcare centre in inner city Brisbane in 1988 seized the opportunity and expanded ambitiously by acquiring properties in prime locations and buying out single day-care centres and smaller childcare groups (Teen, 2012). In 2005 ABC Learning established itself United States by acquiring control of Learning Care Group Incorporated the operator of 460 centres (Rochford 2005) as cited in (Rush & Downie, 2006). ABC Learning was also contemplated diversifying into Canada and Asia (Rush & Downie, 2006). Plans t initiate government subsidy scheme similar to the Australian model for child care in Canada made a more attractive prospect (Wiesenthal 2005) as cited in (Rush & Downie, 2006). In 2004 ABC Learning centre merged with the Peppercorn Management Group its principal New Zealand competitor (Leyden, 2004). This merger permitted ABC to boost its New Zealand operations from the 17 childcare centers that it operated, because Peppercorn had management rights for 52 centres within New Zealand. This led to the number of centres under ABC Learning control increasing from 327 to 660 in the financial year ending 2005 (Rush & Downie, 2006). Eventually acquiring 2300 centres across three continents by 2007 (Walsh, …show more content…
These include the problem of an entrepreneur becoming blinded by personal ambition and the desire to be the industry leader and losing sight of the need to adhere to sound business practices especially in the areas of corporate governance and adherence to sound accounting principles. This is especially evident in the need to closely monitor cash-flow and the need to base profit projections a realistic model. In this case share values and profit projections were unrealistically high. The case also highlights the need for lending intuitions and governments to make establish clearer guidelines in regard to lending, in this case money was lent on the basis of projected future earnings. ABC’s collapse also highlights the need for methodology both for providing a realistic assessment of intangible assets and also the need to establish some form or limit in regard to the amount of intangible assists a company can carry on its balance sheet. The payment of child care subsidies to consumers directly in this case parents, is another area that could should be addressed. Payment could alternatively be made to providers after meeting governmental guidelines. The case finally highlights the need for ASIC To be more vigilant act on information from supplied by the