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Article
Publication date: 1 January 2013

Mehmet Sinan Goktan

The purpose of this paper is to analyze the implications of the target valuation uncertainty on the wealth distribution between the target and acquirer firms in successful…

Abstract

Purpose

The purpose of this paper is to analyze the implications of the target valuation uncertainty on the wealth distribution between the target and acquirer firms in successful mergers. The paper specifically analyzes the division of the total dollar gains between the two parties and also whether the target and/or the acquirer experience a positive/negative gain in mergers when valuation of the target company is more uncertain.

Design/methodology/approach

The analyses contrast the implications of the uncertainty in three well‐known merger hypotheses; the market‐for‐corporate‐control, hubris and synergy.

Findings

The results are supportive of the implications of the synergy hypothesis. As target valuation uncertainty decreases, it is more likely that both parties experience positive gains from the transaction although more of the gains from the merger significantly shift towards the target company.

Originality/value

Results suggest that both parties are bargaining on the synergy gains and the target is able to negotiate a greater portion of the synergy gains when the value of the target becomes more predictable.

Details

Managerial Finance, vol. 39 no. 1
Type: Research Article
ISSN: 0307-4358

Keywords

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Article
Publication date: 1 March 2000

K.G.B. Bakewell

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐17; Journal of Property Investment & Finance Volumes…

Abstract

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐17; Journal of Property Investment & Finance Volumes 8‐17; Property Management Volumes 8‐17; Structural Survey Volumes 8‐17.

Details

Property Management, vol. 18 no. 3
Type: Research Article
ISSN: 0263-7472

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Article
Publication date: 1 March 2001

K.G.B. Bakewell

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes…

Abstract

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.

Details

Property Management, vol. 19 no. 3
Type: Research Article
ISSN: 0263-7472

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Article
Publication date: 1 May 2000

K.G.B. Bakewell

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐17; Journal of Property Investment & Finance Volumes…

Abstract

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐17; Journal of Property Investment & Finance Volumes 8‐17; Property Management Volumes 8‐17; Structural Survey Volumes 8‐17.

Details

Journal of Property Investment & Finance, vol. 18 no. 5
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 1 May 2001

K.G.B. Bakewell

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes…

Abstract

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.

Details

Journal of Property Investment & Finance, vol. 19 no. 5
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 30 August 2013

K. Srinivasa Reddy, Rajat Agrawal and Vinay Kumar Nangia

Does target firm shareholders excessively paid or adequately rewarded or stumpy compensated? To address this query, the study aims to remix valuation parameters for better…

Abstract

Purpose

Does target firm shareholders excessively paid or adequately rewarded or stumpy compensated? To address this query, the study aims to remix valuation parameters for better combination of mixture so that it represents fair deal value in merger and acquisition (M&A) negotiation process. The purpose of the study is to redesign the existing valuation methods, craft new models and compare them to suggest perceptive guidelines for “valuation governance”.

Design/methodology/approach

This research reconstructs discounted cash flows (DCF) and net asset valuations (NAV), originate NRR‐APB approach, MCF‐RS and MCF‐ES and finally compare all seven methods for each select company in the respective industry/sector. Exclusively, estimating the forecasting hurdle rate (FHR) is a core competence of valuation process.

Findings

Among the valuation models, all seven methods for select companies have been reported diverse values, however NRR‐APB approach describe factual enterprise value for bargaining the value of target firm in structuring M&A deals.

Research limitations/implications

Due to petite sample, study has limited scope to validate the proposed conceptual models for valuation governance. Particularly, models have developed under the Indian accounting regulations, standards and reporting mechanism. Though, it can be practiced in other accounting standards on trail and error basis.

Practical implications

Valuation practitioners, governments, consultants, M&A advisory, market research and academia may implement these business valuation techniques, guidelines and implications in particular sector/industry to protect the interest of target firm shareholders and justify the consistent value for acquirer/bidding firm. Accordingly, stakeholders' interest could also be sheltered.

Originality/value

The paper intends to introduce NRR‐APB approach, MCF‐RS and MCF‐ES, reengineering DCF and NAV and compare these valuation methods on three companies each in select two industries, auto ancillary and hotels and resorts. Further, it would be adding a token of contribution to the notable area corporate finance. Hence, this article is the first study to argue on valuation governance and recommend state to enact immediately in India.

Details

International Journal of Commerce and Management, vol. 23 no. 3
Type: Research Article
ISSN: 1056-9219

Keywords

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Article
Publication date: 13 November 2017

Jie Liang, En Xie and K.S. Redding

Nested within the industrial organization and corporate finance literature, this paper aims to analyze the market for cross-border mergers and acquisitions (M&A) in the…

Abstract

Purpose

Nested within the industrial organization and corporate finance literature, this paper aims to analyze the market for cross-border mergers and acquisitions (M&A) in the world economy, developed economies, developing economies and transition economies. As multinational companies hold a large proportion of cash reserves and expand into diverse geographic markets, the paper aims to examine market patterns of high-valuation cross-border acquisition transactions. Specifically, it proposes a framework explaining the influential factors, motives and effects of high-valuation transactions by discussing some case evidences.

Design/methodology/approach

Drawing upon inductive and deductive logic, the paper discusses market trends and market patterns of cross-border M&A transactions by triangulating archival data analyses and accessible M&A literature. Some case examples are derived from news archive and official source sites. Regarding sample period, it considers the past two decades 1994-2013 to show market trends in various institutional settings and the past decade 2004-2013 to present market patterns of 62 high-valuation cross-border deals.

Findings

The transaction analysis indicates four cycles in the market trend, namely, growing period (1994-2000); declining, but promising period (2001-2006); financial crisis period (2007-2008); and recovering, but reversing period (2009-2013). A number of acquisitions undertaken by firms from emerging economies around the 2007-2008 global financial crisis have exemplified geographic (product) diversification as a primary motive of firm’s global strategy. In particular, a large proportion of sample high-valuation deals are spotted in developed economies such as the USA and the UK. In case of industry pattern, a good number of high-valuation deals are noticed in banking and finance, telecommunications and oil and gas sector.

Originality/value

Although several scholars have examined cross-border acquisitions in economics, corporate finance, strategy and international business literature, there is hardly any study that analyzes high-profile cross-border M&A deals. An exclusive market analysis of high-valuation international deals is important for several reasons. This paper fills this knowledge gap by showing both market trends and market patterns of cross-border M&A transactions. Importantly, to date, this paper is the first to propose a framework explaining the influential factors, motives and effects of high-valuation M&A transactions.

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Article
Publication date: 1 September 2000

Index by subjects, compiled by K.G.B. Bakewell covering the following journals: Facilities Volumes 8‐17; Journal of Property Investment & Finance Volumes 8‐17; Property…

Abstract

Index by subjects, compiled by K.G.B. Bakewell covering the following journals: Facilities Volumes 8‐17; Journal of Property Investment & Finance Volumes 8‐17; Property Management Volumes 8‐17; Structural Survey Volumes 8‐17.

Details

Facilities, vol. 18 no. 9
Type: Research Article
ISSN: 0263-2772

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Article
Publication date: 1 March 2001

K.G.B. Bakewell

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes…

Abstract

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.

Details

Structural Survey, vol. 19 no. 3
Type: Research Article
ISSN: 0263-080X

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Article
Publication date: 1 September 2001

Index by subjects, compiled by K.G.B. Bakewell covering the following journals: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property…

Abstract

Index by subjects, compiled by K.G.B. Bakewell covering the following journals: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.

Details

Facilities, vol. 19 no. 9
Type: Research Article
ISSN: 0263-2772

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