ENGLISH

The Value of Synergy

By Damodaran Aswath.

Book information

Language
english
Format
PDF
Filesize
928 kB (950706 bytes)
Pages
\47
Topic
Economy Investing
Library
twirpx
Time added
2017-08-07 07:01:42
Финансово-экономические дисциплины;Инвестиции

Description

Many acquisitions and some large strategic investments are often justified with the argument that they will create synergy. In this paper, we consider the various sources of synergy and categorize them into operating and financial synergies. We then examine how best to value synergy in any investment and how sensitive this value is to different assumptions. We also look at how this synergy value should be divided between the parties (or companies) involved in the investment. We conclude with an empirical examination of how much synergy is actually created in corporate mergers, and how much is paid. Synergy, we conclude, is so seldom delivered in acquisitions because it is incorrectly valued, inadequately planned for and much more difficult to create in practice than it is to compute on paper.

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