Reply To: Acquisition at a premium

#38946
Yuin Harng Ng
Participant

The synergies and value-add we can achieve due to our post-integration efforts and capabilities would be our future profit, assuming it exceeds integration costs.

However, if the premium paid to the target company is in excess of its valuation, then naturally that entire premium would be your future profits given to the target company.

The structure of a deal will determine how easy or difficult the deal would become a success. Give too much of the potential synergies away to the target company and the margin of success will narrow, especially when potential is merely potential, it needs to be excavated in order to become realised gains.

Hope this helps, cheers.

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