Reply To: Multiple acquisitions


Henrik Jernstrom

Conglomerates have been successful in playing the multiple arbitrage, where they acquire companies at a lower multiple than what themselves are trading at. When the profit of the acquired company is added to the acquirer’s profit, this is valued at the higher multiple. This is one type of company / strategy that is only focusing on acquisitions and being successful (then one can wonder why the equity market is not seeing through this arbitrage).

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