StudentShare solutions
Triangle menu

Mergers and aqcuisition - Essay Example

Not dowloaded yet

Extract of sample
Mergers and aqcuisition

Since Bentley has somehow gained fame after operating with eleven stores in Southern Europe, Zeta's should look for 24-year AA bonds to determine the discount rate. Judging by the present status of Bentley in the Southern European market, the discount rate Zeta's should use to assess the value of Bentley for their equity holders should range from 5.0%-5.25%. At this low discount rate, they generally have a much shorter period concerning their liabilities. Furthermore, a discount rate of that range is competitive enough to acquire Bentley if Zeta's other competitors for Bentley acquisition uses a higher discount rate. Zeta's also have the advantage since they have operated for years and gained patronization from retail stores in London and Newcastle. Thus, using a lower discount rate to assess the Bentley's is a safe way for their excess cash. By doing so, Zeta's is being prudent enough. If they take the bond rate, Bentley equity holders would actually overview it down for prudence. Apparently, it is quite difficult to get a good AA measure for acquisition and bond yields. Markova (2001) states that if a company uses a discount rate of such range, the competitors tend to overlook the rate and thus t discourages them to continue bidding.
Terminal value is defined as the value of any item at the end of a particular time phase. ...Show more

Summary

The discount rate is the assessment used in accounting procedures to find out the current price or significance of potential cash flows arising from a project. For instance, an international marketer might want to acquire an enterprise in Japan. Thus, he must determine the discounted value of all future cash flows (Heckel, 1999)…
Author : anyafahey
Mergers and aqcuisition essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Mergers and aqcuisition"
with a personal 20% discount.
Grab the best paper

Related Essays

Mergers & Acquisitions
Since the past decade, the globalisation of the businesses across the globe has initiated a search for the competitive advantage, worldwide. With the increased competition to fetch the customer satisfaction in a cost effective way, the companies have responded to the pressure of attaining scale in a quickly consolidating global economy
10 pages (2500 words) Essay
Mergers Essay
This paper focuses on the motivating factors toward mergers and the problems caused by these mergers. In this section we discuss why firms merge, some of the reasons why firms merge include the effort to gain market power, tax advantages of gaining a loss making firm, efficiency, increasing market share and diversification among other factors.
6 pages (1500 words) Essay
Mergers & Acquisitions
Most companies carry it out to improve their business fortunes. The terms mergers & acquisitions are generally used together or sometimes even interchangeably but there is a sight difference in the two terms. Acquisition takes place when one company becomes the owner of another company in a way that the company sold ceases to exist and the buyer company continues to trade its stock.
8 pages (2000 words) Essay
Conglomerate Mergers
Conglomerate mergers take place when the firms involved in the merger operate in different product markets. These mergers may be product extension mergers - merger involving firms that produce different but related products - or pure conglomerate mergers - mergers between firms operating in entirely different markets.
8 pages (2000 words) Essay
Mergers & Acquisitions
In a merger, the surviving firm acquires the assets and liabilities of the other firm(s). A relevant example here is the recent merger of HDFC Bank and Times Bank. After the merger, Times Bank will go out of existence and expanded HDFC Bank will continue to exist.
8 pages (2000 words) Essay
Mergers & Acquisitions
The current P/E ratio of the shares is 6.6 and the market price per share is 1.03. Since P/E ratio = market price per share/earnings per share (www.12manage.com), if the P/E ratio is to be 8 without affecting the earnings from the share, the value of the
4 pages (1000 words) Essay
Exchange Mergers
independent business corporation into a single enterprise which is accomplished by one firm purchasing the assets of the other or by purchasing its equity stocks is called a merger (Britannica). The history of mergers dates back to the 1960’s when these arrangements occurred
6 pages (1500 words) Essay
Mergers & Acquisitions
lly starts through a series of informal discussions among the board members of the companies, following with formal negotiations, letter regarding the objectives, goal towards the company, acquisition or merger agreement and finally, executing the deal and transferring the
15 pages (3750 words) Essay
Mergers
ugh the method has been employed by many companies around the world, it has been reported that half of these companies fail to achieve their goals of merging. To avoid these failures, companies have been advised to observe best planning methods before engaging in the business.
2 pages (500 words) Essay
Airline Mergers
In this report I have written on who benefits between the industry and the consumer in case of a merger. Report finds that both benefit. American aviation industry has been qualified us the most profitable
7 pages (1750 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT