What are the steps involved in an Acquisition Valuation?
Acquisition valuations are complex, because the valuation often involved issues like synergy and control, which go beyond just valuing a target firm.
Following are the steps in Acquisition valuation process:
Step 1: Establish a motive for the acquisition
Step 2: Choose a target
Step 3: Value the target with the acquisition motive built in.
Step 4: Decide on the mode of payment – cash or stock, and if cash, arrange for financing – debt or equity.
Step 5: Choose the accounting method for the merger/acquisition-purchase or pooling.