IntroductionLEI, Inc., a public company, has decided to acquire Shang-wa, a Korea-based company that produces vertically integrated capacitors. LEI's CEO convinced shareholders that this move is necessary to avoid the acquisition of Shang-wa by one of LEI's competitors, Transnational Electronics Corporation (TEC). Shang-wa has historically accounted for 43% of LEI's revenue stream. Following approval by the Board to proceed with the Acquisition, LEI must determine which financing alternatives it wishes to utilize to complete the Acquisition. The baseline studies included in this document illustrate several relevant alternatives to consider. They include reviewing the financial mix that will optimize the capital structure of the new company; the weighted average cost of capital considerations in financing; evaluate a dividend policy; and analyze risks associated with various financial considerations such as executive stock options and conducting an IPO. Recommend a financing mix that optimizes capital structures There are many methods by which a company can raise the necessary funds. Typically a business is not financed 100% by debt. Debt-equity balance is one of the most basic and important financial issues any business faces. The use of stocks and bonds as financing options can play an integral part of any organization. These programs become a significant part of a company's capital structure and an important part of company valuation by future investors. As businesses expand, the company's capital needs increase over a period of time to cover costs. The need for a capital increase can put pressure on a company's overall capital structure. Lester Electronics is now facing the same problems in trying to secure financing alternatives. The LEI must find a financial mix that allows the optimization of the capital structure. One of the included case studies, that of Domino's, highlights how the use of stock options in a repurchase option recovered 13.9 million shares of common stock which ultimately led to a share price increase of 11%. % for Dominos. The use of bonds, another option in optimizing the financial mix, is illustrated in the Cingular case study. This study illustrates how using a combination of bond issuance along with other financial strategies helped Cingular obtain the financing needed to successfully complete a merger. Flowserve, with its acquisition of Ingersoll Dresser Pumps, demonstrates the importance of balancing debt and equity. In this example, a heavy debt load strained the company's ability to meet payments when the market unexpectedly contracted