- CFA Exams
- 2023 Level I
- Topic 4. Corporate Issuers
- Learning Module 18. Mergers and Acquisitions
- Subject 9. Benefits from Mergers
Seeing is believing!
Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.
Subject 9. Benefits from Mergers PDF Download
The empirical evidence suggests that merger transactions create value for target company shareholders. Some believe that the high premiums paid to target shareholders are partly the result of the winner's curse, in which the competitive bidding process is won by the firm who overestimate the target's value. When there is a competition among bidders, it will increase the gains for the target.
The Hubris Hypothesis: the acquiring firm's management overvalues their ability to create value once they take control of the target firm's assets.
Acquirers, in contrast, tend to accrue value in the years following a merger. This finding suggests that synergies are often overestimated or difficult to achieve.
Learning Outcome Statements
j. describe characteristics of M&A transactions that create value;CFA® 2023 Level I Curriculum, Volume 3, Module 18
User Contributed Comments 0
You need to log in first to add your comment.
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
My Own Flashcard
No flashcard found. Add a private flashcard for the subject.
Add