Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Logic of Merger and Acquisition Pricing

Contents:

Author Info

  • Lenz, Rainer
Registered author(s):

    Abstract

    The valuation of synergy is vital to the success of any merger, however, given current valuation methodologies and the complexity of the task; it is also the most challenging element of merger and acquisition pricing. Conventional valuation methods assume that sales figures and market share of the acquiring company are easily transferable within the new entity. Current synergy practices also assume amalgamating various corporate functions will produce significant cost reductions. The key component missing from current methodologies is the failure to analyze every corporation as a complex system containing various elements and relations. If such a delicate system is segmented due to a merger, the outcome measured in turnover and profit figures can not be accurately forecasted by simply aggregating key financial figures. The goal of this article is to go beyond the simplicity of current methods in order to develop a methodology better suited for evaluating synergy effects. This new approach integrates elements from both the framework of knowledge management and the sociological theory of systems and elements. The alternative methods proposed in this article will simultaneously deliver creative and innovative solutions to enhance the success of mergers and acquisitions. These new proposals also help to clarify the short comings plaguing traditional methods which inevitably lead to the destruction of shareholder wealth.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://mpra.ub.uni-muenchen.de/26627/
    File Function: original version
    Download Restriction: no

    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26627.

    as in new window
    Length:
    Date of creation: Jun 2008
    Date of revision:
    Handle: RePEc:pra:mprapa:26627

    Contact details of provider:
    Postal: Schackstr. 4, D-80539 Munich, Germany
    Phone: +49-(0)89-2180-2219
    Fax: +49-(0)89-2180-3900
    Web page: http://mpra.ub.uni-muenchen.de
    More information through EDIRC

    Related research

    Keywords: Merger; Acquisition; Pricing Methods; Corporate Evaluation; System theory; Asset pricing; Investment evaluation;

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Savvides, Savvakis C., 1994. "Risk Analysis in Investment Appraisal," MPRA Paper 10035, University Library of Munich, Germany, revised 14 Aug 2008.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:26627. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.