Asked by Mateo Gonzalez on Jul 20, 2024
Verified
The value of firm B to firm A is equal to the value of:
A) Firm B as a stand-alone firm plus the synergy value.
B) The incremental benefit of the merger or acquisition.
C) The incremental cash flows from the merger or acquisition.
D) The incremental cash flows minus the value of firm B as a stand-alone firm.
E) The firm AB plus the incremental gain.
Synergy Value
The additional value generated by combining two companies or assets, where the value of the whole is greater than the sum of the individual parts.
Incremental Benefit
The additional gain derived from a new action or decision, compared to the previous state, often used in cost-benefit analysis.
Stand-Alone Firm
A business that operates independently, without reliance on or integration with other companies.
- Understand the monetary assessments and numerical analyses necessary in determining the value of mergers and acquisitions.
- Explain the concept of synergy in the context of mergers and acquisitions.
Verified Answer
AH
Allyson HernandezJul 27, 2024
Final Answer :
A
Explanation :
The value of firm B to firm A includes the value of firm B as a stand-alone entity plus any additional value (synergy) that arises from the merger or acquisition, which can result from cost savings, increased market power, or other factors.
Learning Objectives
- Understand the monetary assessments and numerical analyses necessary in determining the value of mergers and acquisitions.
- Explain the concept of synergy in the context of mergers and acquisitions.