Chapter 6. Accounting Considerations
By substantially overpaying for acquisitions, acquirers condemn themselves to having to improve profitability dramatically just to earn the financial returns required by investors. If they have significantly overestimated potential synergy, they will be unable to realize these returns. The tendency in the late 1990s was to overpay, and so many firms have been forced to write off goodwill in line with current accounting practices associated with prior acquisitions or major portions of the acquired assets.
By substantially overpaying for acquisitions, acquirers condemn themselves to having to improve profitability dramatically just to earn the financial returns required by investors. If they have significantly ...