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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Pursuit co (6/11)
Sir, sorry for troubling you at the eleventh hour! I would be indebeted if you could answer this question:
Why are we not deducting the values of the debt when we consider the synergy? We are comparing the values of th firm (debt + equity) before and after acquisition! Should not we be comparing the values of equity instead? (I tried doing so and ended up with a negative value for synergy!)
Please please help me with the above! Many thanks!!!
The synergy benefit itself is the benefit to the whole company (regardless as to how the company is financed).