Introduces a framework for evaluating acquisitions and mergers. Assumes the standard of a superior deal is that it create value for shareholders; i.e., has a affirmative deal NPV. This case looks at the arrangement NPV from both the buyer's and seller's point of view.
Describes how a positive deal NPV leads to favorable predicted cumulation of abnormal returns. It then presents a framework for computing deal NPVs based on the value of the goal, the work to be done, the consideration paid, and the value created through restructuring or synergy. Concludes by introducing the notion of 'fragility threat,' that is essentially the risk that the purchaser's plans will go awry.
PUBLICATION DATE: October 18, 2007 PRODUCT #: 208060-PDF-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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