Desperately Seeking Synergy
- Topics:
- Mergers
- Tags:
- Acquisition,
- Acquisition Premium,
- Business Operations,
- Corporate Law,
- Finance,
- Financial Executives International,
- Investment,
- Market Price,
- Mergers & Acquisitions
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Overview: Mergers and acquisitions are happening at a frenetic pace. However, the question, which arises, is do all the corporate meldings work happily ever after? Companies are trying to buy their way to strategic growth with bigger acquisition premiums and more cross-border deals. An acquisition premium is the amount an acquiring company pays above the current market price to buy a target company's stock. Investors put a lot of effort into the job of calculating the economic value of a company's expected future cash flows, and experience shows that the market price of a stock reasonably reflects that value. Ironically, while merger-bound executives concentrate on crunching numbers with their investment bankers, the market probably will be watching people for its own early clues to whether the merger is likely to deliver promised synergies.
(Is this item miscategorized? Does it need more tags? Let us know.)
Format: HTML | Date: Jan 2003 | Pages: 4
