Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
tender offers are slightly higher than the premiums in mergers.Figure 15.4, extracted from one study, 31 provides an illustratio ...
Netter, in theirexamination of tender offersfrom 1962 to 1985,noteadeclineinreturnstobiddingfirmstockholders from4.4percentinthe ...
QVC, which lost the bidding war, actually had higher synergies with Paramount than Viacom did. Consideringtheevidence,itiseasyto ...
Managerial hubris. Roll (1986) argued that managerialpridewasattherootoftheoverpayments in many acquisitions. 34 Acquiringfirms ...
Theevidenceonmergersaddingvalueismurkyatbestand negativeatworst.But somemergersclearlyaddvalueand somearesuccessfulatcreatingsyn ...
Acquisition programs that focus on buying small privatebusinessesforconsolidationshavehadmore successthanacquisitionprogramstha ...
COMMON ERRORS IN VALUING SYNERGY While firmsareoftenwillingto paybillionsof dollarsfor synergyinmergers,thereareseveralcommonerr ...
firmstockholders,whoplayednoroleintheacquiringfirm’s higher rating, be paid a premium for that higher rating? Payingthishigherva ...
Notwithstandingthisprinciple,therearesomecommonerrors that continue to be made when it comes to valuing synergy: Cash flows gen ...
valueofsynergyforthefollowingreason:Synergyrequires twoentities(firms,businesses,projects)foritsexistenceand iscreatedbycombinin ...
synergy,acquiringfirmstockholdersgetalmostnoneofthe benefits of the increased value; in fact, they overpay for synergyinmostacqu ...
thatmaybecreatedwhenthetargetstockpriceincreasesonce an acquisition is announced. 6 Paul D.Childs,StevenH.Ott, and AlexanderJ.Tr ...
tocomputethecostofcapitaleachyear,usingtheestimated value of the firms each year. 11 L. Lang and R. Stulz, “Tobin’s Q, Corporate ...
17 G.Andrade,“DoAppearancesMatter?TheImpactofEPS Accretion and Dilution on Stock Prices,” working paper, Harvard Business School ...
25 M.L.MitchellandK.Lehn,“DoBadBiddersMakeGood Targets?,”Journal of AppliedCorporateFinance 3 (1990): 60–69. 26 S. Kaplan and M. ...
33 P.Hietalla,S.N.Kaplan,andD.T.Robinson,“WhatIsthe Price of Hubris? Using Takeover Battles to Infer OverpaymentsandSynergies,”w ...
CHAPTER 16 The Value of Transparency When valuing firms, we draw on financial statements for information and trust these stateme ...
AN EXPERIMENT Consider thefollowingexperiment.Youareanalyzing two firms with thesame overall market risk exposure and the same f ...
differencesacrossfirmsonfundamentals,thesefundamentals tendtobefinancial(risk,growth,andcashflows)andalmost neverrelatetocomplex ...
information.Inthesecond,theinformationmaybeavailable, but the firm itself is so complex (either because of its organizationalstr ...
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