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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Post aquisition calculation of company value
Hello John,
When provided with the following details, which is the correct method of calculating post aquisition company value? :
Details
-Most recent profit after tax for aquirer and aquirer on their own, pre aquisition
-P/E ratio after aquisition
-Synergy p.a. created from aquisition
I am uncertain if I should use bootstrapping or add synergy onto individual company values pre aquisition
My uncertainty arises because the P/E ratio of joint company post aquisition is LESS than the P/E ratio of the acquiree company on its own. Does it have a bearing on which method I should use the fact that it is less?
Many thanks