Merger Valuation: Time to Jettison EPS

Topics:
Mergers
Tags:
Accounting,
Mergers & Acquisitions,
Merger,
McKinsey & Co.,
Investment,
Financial Services,
Financial Accounting,
Finance,
Earnings Per Share,
Corporate Law,
...
Source:
McKinsey & Company

Vendor Registration: required

Overview: Under new accounting rules, few if any acquisitions appear to dilute earnings per share - but this doesn't mean that acquisitions are any more likely to create value. Even those that appear to increase a company's earnings per share can actually destroy it. In view of the changed accounting rules, the article depicts that the executives and directors should stop using earnings per share as a proxy for how much value an acquisition will create and focus instead on more reliable measures, such as a deal's impact on economic profit.

(Is this item miscategorized? Does it need more tags? Let us know.)

Format: HTML | Pages: 5

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