Skip to Main Content
Corporate Finance, 5th Edition
book

Corporate Finance, 5th Edition

by Pierre Vernimmen, Pascal Quiry, Maurizio Dallocchio, Yann Le Fur, Antonio Salvi
December 2017
Intermediate to advanced content levelIntermediate to advanced
1024 pages
32h 22m
English
Wiley
Content preview from Corporate Finance, 5th Edition

Chapter 44 Taking control of a company

A peek behind the scenes of investment banking

At any given time, a company can have several valuations, depending on the point of view of the buyer and the seller and their expectations of future profits and synergies. This variety sets the stage for negotiation but, needless to say, a transaction will take place only if common ground can be found – i.e. if the seller’s minimum price does not exceed the buyer’s maximum price.

The art of negotiation consists of allocating the value of the anticipated synergies between the buyer and the seller, and in finding an equilibrium between their respective positions, so that both come away with a good deal. The seller receives more than the value for the company on a standalone basis because he pockets part of the value of the synergies the buyer hopes to unlock. Similarly, the buyer pays out part of the value of the synergies, but has still not paid more than the company is worth to him.

Transactions can also result from erroneous valuations. A seller might think his company has reached a peak, for example, and the buyer that it still has growth potential. But generally, out-and-out deception is rarer than you might think. It’s usually only in hindsight that we say we made a killing and that the party on the other side of the transaction was totally wrong!

In this chapter we will focus on the acquisition of one company by another. We will not consider industrial alliances, i.e. commercial or ...

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Corporate Finance For Dummies

Corporate Finance For Dummies

Michael Taillard
Fundamentals of Corporate Finance, 4th Edition

Fundamentals of Corporate Finance, 4th Edition

Robert Parrino, David S. Kidwell, Thomas Bates, Stuart L. Gillan
Corporate Finance Theory and Practice, Third Edition

Corporate Finance Theory and Practice, Third Edition

Pascal Quiry, Maurizio Dallocchio, Yann Le Fur, Antonio Salvi
Corporate Finance: A Practical Approach, Second Edition

Corporate Finance: A Practical Approach, Second Edition

CFA Michelle R. Clayman, CFA Martin S. Fridson, CFA George H. Troughton

Publisher Resources

ISBN: 9781119424482Purchase book