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The annual reports of many corporations proclaim that creating shareholder wealth is their fundamental economic objective. But when it comes to making acquisitions, these companies often find it difficult to assess just how much shareholder value a new addition might create. Conventional accounting‐oriented methods have proved inadequate, and more and more, corporate planning and development groups are adopting the Shareholder Value approach to acquisition analysis.

Strategic plans need to be evaluated in rational economic terms. Earnings per share and book ROI no longer do the job. What is needed, the author contends, is a new shareholder value approach.