Disney’s Marvel Acquisition: A Strategic Financial Analysis
Strategy & Leadership, Vol. 38, No. 2, pp. 42-51, 2010
Posted: 4 Mar 2010
Date Written: March 3, 2010
Purpose: Assess the value and risks of Disney’s 2009 $4 billion acquisition of the Marvel Entertainment Group (Marvel) in a case study utilizing the modern Graham and Dodd valuation approach.
Design/methodology/approach: Presents a detailed valuation of Marvel in 2009 drawing on previously published Graham and Dodd methodological materials and Marvel’s publicly available financial reports.
Findings: Disney’s $4 billion acquisition price for Marvel contained considerable risks based on certain valuation assumptions, which were identified in the context of our analysis.
Practical and research implications: This acquisition is a useful one for executives to study because it involves a situation many of them could face: evaluating the purchase of a great company that is seemingly a strategic fit and offered at what appears to be a reasonable price. Assessing such opportunities utilizing the modern Graham and Dodd valuation approach facilitates greater levels of insight into key assumptions, value drivers, and risks. This is a methodology that has proved useful to successful value investors over time.
Originality and value: Lessons executives in many industries can learn from a Graham and Dodd-based valuation of the 2009 Disney acquisition of Marvel include: better risk assessment, valuation of entertainment property assets and franchise assessment.
Keywords: M&A, Valuation, Investment
JEL Classification: G34, L2
Suggested Citation: Suggested Citation