From 'Strategic Fit' to Synergy Evaluation in M&A Deals
Caspian Journal of Applied Sciences Research, 1(12):25-38, 2012
14 Pages Posted: 21 Oct 2012 Last revised: 3 Dec 2012
Date Written: 2012
The aim of this paper is to grasp the processes underlying the genesis and assessment of synergies in M&A deals. We proceed to an in-depth scrutiny of the foundations of synergies using Porter’s model of the value chain. A discernment of the nature of synergies and the mode of their emergence is helpful to clarify to what extent and under which boundary conditions it is appropriate to apply the DCF or the real option techniques for evaluating each type of synergy. Combining both financial tools, the methodology suggested for evaluating the synergies is able to: evaluate projects of M&As, orient the selection of target firms and the definition of the premium of acquisition, and drive the integration processes.
Keywords: merger, acquisition, synergy, Porter’s value chain, evaluation
JEL Classification: G31, G32, G34, L21, M21
Suggested Citation: Suggested Citation