Alternative Approaches to Valuation
This chapter deals with alternative approaches to company valuation for merger and acquisition (M&A). Naturally, accurate assessment of the value of the target firm in determining the fair price investors should pay for the entity in a competitive market is critically important for the financial success of the acquisition. However, even though determination of a fair price is the necessary condition for success, it is by no means a sufficient condition for the eventual success of the combination because a fair price cannot guarantee smooth, successful postmerger integration of the entities.
Several methods for company valuation exist.1 In this chapter, we examine three approaches that are listed below: ...
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