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Home portfolios Strategic Financial Management - Mergers & Acquisitions

Strategic Financial Management - Mergers & Acquisitions


Area of Expertise:

  • Accounting & finance


This report looks deeply upon the valuation effects of the mergers and acquisition for both the bidder and the acquirer firm. According Bradley, Kim and Desai (1988) with an effective valuation, value of the target and acquirer firms increase by an average of 7.4%. However, it has also been observed that increase in competition increases the returns for the target company and decreases the returns of acquirers whilst having no impact on the total (percentage) synergistic gains created but have significantly affected their division between the stockholders of the target and acquiring firms. This paper analyses the views of a corporate valuation in mergers and acquisition from a critical perspective and inference is drawn based on the evidences. This paper further probe into the merger waves from a historical perspective and outlines the evolution of the merger waves through outlining differences from the past.