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Hi John
Please clarify when to use each of the formulae
Equity value of target X
Equity value of acquirer. X
Synergy X
=Value of comb coy. XXEarnings of target X
Earningsof acquirer. X
Synergy X
=Value of comb coy. XXThank you
I cannot clarify because it all depends on the wording of the question and the information given in the question.
It is the earnings of the company that determine the value of the company, and you will normally be needing to use the earnings. Adding earnings + synergy gives total earnings, but total earnings is not the value of the company!!!
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