The Value of Mergers and Acquisitions

Mergers and acquisitions are usually used Read Full Report by companies to expand their business, either by entering new markets, or expanding their product range. These transactions can boost the growth of a company and increase its profitability in the short-term. But over the long haul they must provide enough synergy value to justify the price of acquisition to shareholders. It is crucial that boards comprehend and evaluate the value of M&A.

Over the last few years, M&A volumes have been increasing rapidly. However, the value of huge deals has been decreasing and no mega-deals being completed in the first quarter of this year. M&A activity has been at a standstill since the middle 2016.

This article discusses the four elements that must be considered when evaluating the value of an M&A transaction.

In the M&A world, it’s common for an acquirer to pay more than the target company’s shares are worth in exchange for the opportunity to enter a new market or increase its competitive position. However, in many cases, the acquisition fails to meet its promise of value. If this happens the company’s shareholders are left thinking « What were they thinking? » Examples of these failures include Apple’s acquisition of iTunes HP’s acquisition data analytics and enterprise search firm Autonomy, and News Corp’s acquisition of the social media site MySpace.

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