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Case Study

Creating value through M&As

By Nuno Fernandes

23 pages

April 2013

Reference: IMD-1-0349

Mergers and acquisitions (M&As) are important events in the life of any manager and company. However, the overwhelming evidence from years of research is that the majority of M&As fail to create value for the acquirer. This note focuses on the main methods used to assess the value creating potential of M&As. Valuation is a key tool to understand whether or not a certain merger will add value to shareholders. Thus, this note covers concepts such as: 1) Value creation through M&As. For whom do mergers create value? 2) Valuation by Discounted Cash Flows (DCF) in M&As; 3) Types of synergies and how to consider them; 4) Appropriate discount rates in an M&A setting; 5) Valuation using multiples and other market transactions as reference.

Learning Objective

This note allows for an understanding of the strategic and economic considerations in mergers and acquisitions, with a focus on the key drivers of successful acquisition strategies.

Keywords

Mergers and Acquisitions, Valuation, Value Creation, Finance

Settings

2013

Type

Generalized Experience

Available Languages

English

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