An Analytical Model of the Value of Mergers and Acquisitions Employing Profit Flows with Synergies
摘要
This paper presents a framework for valuing mergers and acquisitions by explicitly incorporating synergies and risk diversification based upon the real options approach. We examine the impact of stochastic profit flows on the timing and terms of mergers in the context of the synergy of the mergers. The paper also explores the analytical properties of the region where the merger is optimal. Numerical examples demonstrate how much more or less a mergers is likely to take place as parameters change.