Mergers & Acquisitions (M&A) and Joint Ventures
Refers to the arena of corporate strategy dealing with the purchasing, selling and combination of different companies and similar entities that drive the growth of a corporation. The term "merger"...More
is meant to depict a situation where two companies combine and one company does not dictate its practices or culture on the other company while the term "acquisition" is meant to depict a situation where one company absorbs another company into its culture and business practices, the distinction is often blurred.
One of the most challenging issued faced whether on the buy or sell side of an acquisition is company valuation – as related directly to the final transaction price for the merger or acquisition. The valuation can make or break the outcome for each side of the buy/sell equation.
Common methods to establish the value of a business are:
One of the most challenging issued faced whether on the buy or sell side of an acquisition is company valuation – as related directly to the final transaction price for the merger or acquisition. The valuation can make or break the outcome for each side of the buy/sell equation.
Common methods to establish the value of a business are:
- * Asset valuation
- * Historical earnings valuation
- * Future maintainable earnings valuation
- * Relative valuation (comparable companies & comparable transactions)
- * Revenue, earnings or cash multiples (e.g. a company may be worth 4 times (4x) its annual operating cash flow, or 2x prior
- year’s revenue, etc.)
- * Discounted cash flow (DCF) valuation
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Anonymous (Treasurer)
