Asked by Alexis Henderson on Jul 11, 2024
Verified
The value of synergy can be estimated by which of the following equations?
A) VAB - VA - VB
B) VAB - VB - taxes
C) VA - VB - costs
D) VA + VB - revenues
Value of Synergy
The additional value created by combining two companies or entities, where the performance and financial results of the merged entity are greater than the sum of the separate individual parts.
Equations
Mathematical statements expressing the equivalence between two expressions, containing one or more variables.
- Familiarize oneself with the assessment of synergy value in mergers and acquisitions, including understanding the tax repercussions.
Verified Answer
M?
Muhittin ?ekerda?Jul 16, 2024
Final Answer :
A
Explanation :
The correct equation for estimating the value of synergy is A) VAB - VA - VB. This equation calculates the combined value of two entities (A and B) together (AB) minus their individual values before the synergy (A and B), effectively capturing the additional value created by the synergy.
Learning Objectives
- Familiarize oneself with the assessment of synergy value in mergers and acquisitions, including understanding the tax repercussions.