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Hello, sir
I have a question. If we know the values of 2 companies before and the value of synergy after acquisition, how are we to calculate an acceptable range of share for share considerations?
The shareholders of the target company will not know what the effect of the synergy benefits will be, and so the minimum that they can be offered is shares in the acquiring company based on the current market value of those shares.
The acquiring company will know what the potential synergy benefits will be, and so the maximum they will be able to afford to offer will be based on the estimated new market value after the acquisition.
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