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Company Valuation in Mergers and Acquisitions

The article “Company Valuation in Mergers and Acquisitions: How is Discounted Cash Flow Applied by Leading Practitioners?” by Brotherson et al. 2016, explores how leading practitioners apply Discounted Cash Flow methods to value company operations. The researchers interviewed the main investment banks to obtain sufficient information about how top consultants apply Discounted Cash Flow. The researchers used open-ended questions in their interviews to make subtle distinctions in practice. Using a merger and acquisitions “league table” from Thomson’s Safeties Data Commission mergers and acquisitions database, the researchers obtained 11 active advisors as to their sample. The scholars approached the advisors using emails, explained the study’s purpose, and interviewed an individual in the mergers and acquisition group. The writers then organized phone conversation interviews and assured the participants that their findings were being cast-off for investigation determinations.

In their findings, the researchers found out that A corporation’s estimated value is contingent on the valuations of the fundamental commercials and assets. The authors discovered substantial configuration among the consultants and between rehearsal and academic guidance on major melodies, including examination of risk knowledge by statistics from financial shops and the use of analogous company data. Their conversations revealed a multifaceted set of verdicts on an estimate. While foremost practitioners regularly use DCF approaches in unions and acquisitions, it needs art and ruling to express inherently indeterminate business predictions, including those adjacent to merger synergies. Their results were further prompted that analytic practices involving DCF methods do not establish conclusions but only update them.

References

Brotherson, W. T., Eades, K. M., Harris, R. S., & Higgins, R. C. (2014). Company Valuation in Mergers and Acquisitions: How is Discounted Cash Flow Applied by Leading Practitioners? Journal of Applied Finance, 2.

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ApeGrade. (2023, February 7). Company Valuation in Mergers and Acquisitions. Retrieved from https://apegrade.com/company-valuation-in-mergers-and-acquisitions/

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ApeGrade. (2023, February 7). Company Valuation in Mergers and Acquisitions. https://apegrade.com/company-valuation-in-mergers-and-acquisitions/

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"Company Valuation in Mergers and Acquisitions." ApeGrade, 7 Feb. 2023, apegrade.com/company-valuation-in-mergers-and-acquisitions/.

1. ApeGrade. "Company Valuation in Mergers and Acquisitions." February 7, 2023. https://apegrade.com/company-valuation-in-mergers-and-acquisitions/.


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ApeGrade. "Company Valuation in Mergers and Acquisitions." February 7, 2023. https://apegrade.com/company-valuation-in-mergers-and-acquisitions/.

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ApeGrade. 2023. "Company Valuation in Mergers and Acquisitions." February 7, 2023. https://apegrade.com/company-valuation-in-mergers-and-acquisitions/.

References

ApeGrade. (2023) 'Company Valuation in Mergers and Acquisitions'. 7 February.

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