Aquisitions

This topic has 4 replies, 3 voices, and was last updated 14 years ago by estherpang87.

Viewing 5 posts - 1 through 5 (of 5 total)

Author

Posts
October 29, 2011 at 1:47 pm #50261
salu007
Member
- Topics: 58
- Replies: 32
Hi Sir,

Is there an easy method of calculating Combined Asset beta and Euity Beta of combined Entity in an Aquisition.
November 6, 2011 at 5:11 pm #89219
John Moffat
Keymaster
- Topics: 57
- Replies: 54858
the combined asset beta is simply the weighted average of the individual asset betas, weighted by the two market values. To get the equity beta you need to use the asset beta formula on the formula sheet and work backwards using the relevant gearing.
November 8, 2011 at 8:45 am #89220
estherpang87
Member
- Topics: 12
- Replies: 12
hello sir, for the two market values tat you mentioned, are you referring to both equity and debt of each company?

Eg: Acquirer’s mv of equity is 100 and mv of debt is 50, Total MV = 150
Acquiree’s mv of equity is 80 and mv of debt is 30, Total MV = 110

So when calculate combined asset beta using weighting, We should use the Total MV of 150 and 110 which included the MV of the debt right?

Thanks
November 19, 2011 at 10:27 pm #89221
John Moffat
Keymaster
- Topics: 57
- Replies: 54858
I think my answer to your previous question should explain that. If not then shout and I will try again 🙂
November 20, 2011 at 8:29 am #89222
estherpang87
Member
- Topics: 12
- Replies: 12
Hi sir,

A million thanks to you. You have finally solved my problem. Thank you so much.
Author

Posts

Viewing 5 posts - 1 through 5 (of 5 total)

You must be logged in to reply to this topic.