Acquisitions are exciting and fun to be part of but they are not great value creators and in this sessions, I tried to look at some of the reasons. While the mechanical reasons, using the wrong discount rate or valuing synergy & control right, are relatively easy to fix, the underlying problems of hubris, ego and over confidence are much more difficult to navigate. There are ways to succeed, though, and that is to go where the odds are best: small targets, preferably privately held or subsidiaries of public companies, with cost cutting as your primary synergy benefit.
Start of the class test: www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/acqanontests.pdf
Slides: http://www.stern.nyu.edu/~adamodar/po…
Post class test: http://www.stern.nyu.edu/~adamodar/pd…
Post class test solution: http://www.stern.nyu.edu/~adamodar/pd…
Aswath Damodaran On Acquisition Valuation
See full slides below.
