8

Mergers and Acquisitions

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Learning Objectives

By the end of this chapter, you should be able to:

•  Describe at least three situations that would make a merger attractive.

•  List and explain the five key elements in the search and screening process.

•  Describe the five critical variables for measuring the financial impact of a merger.

•  Explain the impact on earnings per share of a potential merger.

•  Explain the impact on the price-earnings ratio of a potential merger.

•  List two valid and two invalid motives for pursuing a merger.

•  Evaluate the significance of an acquisition on a firm’s future performance.

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