Chrysler - Acquisition

Chrysler - Acquisition

“Will private ownership be the model that saves the struggling U.S. auto industry?” (Muller, 2007, p 169). Chrysler Automotive seems to think so. In August, 2006, Chrysler was purchased by a private equity firm, Cerberus Capital Management. Prior to the purchase, Chrysler was experiencing weakening sales and could not seem to regain market share. The company was further restricted by a narrow range of products, obsolete technologies, a mostly restricted presence outside of the U.S., and high U.S. labor costs. As the company struggled to stay afloat, in a last chance to save itself, Chrysler sold out in an acquisition by Cerberus Capital Management and became private. Since the acquisition, top executives of Chrysler have been able to speedily make changes and improvements to existing models of Chrysler automobiles, even to the tune of millions of dollars spent for changes. The reason for the speed at which decisions are now made is that Chrysler executives do not have to go through the typical, lengthy, approval process usually required by the members of the board when the company was publicly traded. Now that they can make changes at a faster pace to keep up with market demand, they can assuredly have a product that appeals to more consumers and keeps up with market trends.

As initiatives to take Chrysler into the global marketplace unfold, the benefits of being a private company allow Chrysler executives to make long-term decisions and act on those decisions, without the typical scrutiny of shareholders to hold them back. Eventually, the plan is to take the company public, but while Chrysler makes improvements and enters global marketplaces with great speed, the benefits of being private are two-fold. Making a transition from an ailing public company to a thriving private company is allowing Chrysler