EFFECTIVE PRICING & VALUATION OF MEGERS & ACQUISITIONS

Abstract

Valuation is the process of estimating the market value of a financial asset or liability. Valuations can be done on assets (for example, investments in marketable securities such as stocks, options, business enterprises, or intangible assets such as patents and trademarks) or on liabilities (e.g., Bonds issued by a company). Valuations are required in many contexts including investment analysis, capital budgeting, merger and acquisition transactions, financial reporting, taxable events to determine the proper tax liability, and in litigation. International mergers and acquisitions have become the preferred mode of overseas investment by multinational companies, accounting for the bulk of FDI in the developed world and for increasing shares in the developing world. International mergers and acquisitions (M&As), particularly those with giant transnational companies (TNCs) spending vast sums of money to take over firms in other countries, are one of the most visible aspects of globalisation. Mergers & Acquisitions have been very much in the news. Although many mergers are taking place, the success rate of a flourishing business after mergers and acquisitions is quite small.