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Incorporating Competition into the APV Technique for Valuing Leveraged Transactions


  • Michael C. Ehrhardt


According to a recent survey, the discounted cash flow approach is the valuation technique most widely used by companies evaluating acquisition targets. But because the DCF approach is inappropriate when the capital structure is changing during the forecast period, many analysts turn to the adjusted present value (APV) approach, which can easily accommodate a changing capital structure. Still, the finance literature has not shown how to incorporate assumptions about the effect of competition in the post-forecast period into an APV analysis. 2005 Morgan Stanley.

Suggested Citation

  • Michael C. Ehrhardt, 2005. "Incorporating Competition into the APV Technique for Valuing Leveraged Transactions," Journal of Applied Corporate Finance, Morgan Stanley, vol. 17(1), pages 79-87.
  • Handle: RePEc:bla:jacrfn:v:17:y:2005:i:1:p:79-87

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