The Value of Mergers and Acquisitions
Companies often make mergers and acquisitions in order to grow by entering new markets or diversifying their product offerings. In the short-term they can boost the company’s profitability and increase its growth. In the long run the deals must generate enough synergy to justify the purchase www.dataroomcloud.org/real-estate-data-room-specifics/ price to shareholders. This is why it’s vital for boards to know and evaluate the worth of M&A.
M&A volume has been growing quickly over the past few years. The value of major transactions has declined and no mega deals were executed in the first quarter of this year. In fact, M&A activity has stalled since the middle of 2016.
This article examines the four elements that must be considered when assessing the value of an M&A transaction.
In the M&A world, it is common for an acquirer to pay more than the shares of the target company are worth in exchange for a opportunity to enter a new market or increase its position on the market. In many instances however, the deal does not deliver on its promise. When this happens, the acquired company’s shareholders ask “What was their thinking?” Examples include Apple’s purchase of iTunes HP’s acquisition enterprise data analytics and search firm Autonomy and News Corp’s purchase MySpace.