The Value of Mergers and Acquisitions

18-10-2023 | Property Development

Acquisitions and mergers are frequently employed by companies to grow their business, either by entering new markets, or expanding their product range. These deals can increase the profitability of a business and its growth in the short term. In the long run the deals must bring about enough synergy that it is worth the purchase price for shareholders. It is essential that boards comprehend and evaluate M&A’s value.

In the past few years, M&A volumes have been growing quickly. The value of large transactions has declined and no mega deals were completed in Q1. M&A activity is actually stagnant since middle of 2016.

This article outlines the four aspects that need to be considered when assessing the value of an M&A transaction.

In the M&A world, it’s typical for the acquirer to pay more than what the shares of the target company are worth in exchange for the chance to gain entry into a new market or improve its competitive position. But in many cases, the acquisition fails to deliver on its promised value. If this happens, the acquired company’s shareholders may wonder “What was their thinking?” Examples include Apple’s purchase iTunes, HP’s acquisition of enterprise data analytics and search firm Autonomy and News Corp’s purchase MySpace.


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