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Valuation for Mergers and Acquisitions, Second Edition by Barbara S. Petitt, Kenneth R. Ferris

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2. Financial Review and Pro Forma Analysis

Market View

In 2007, Microsoft purchased aQuantive, an online advertising company. At the time, the acquisition was the software giant’s largest ever. Microsoft paid $6.3 billion in cash, an 85 percent premium over aQuantive’s share price, to jump-start its online advertising business and challenge Google, which had recently purchased DoubleClick, one of aQuantive’s key competitors. The online advertising market was worth $25 billion in 2007, and it had experienced a growth of 30 percent year-on-year.

Microsoft viewed the acquisition of aQuantive as an opportunity to capture a significant share of this growing market and boost its online revenue and profit. Five years later, Microsoft announced that ...

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