Discount Rate on Synergies?
Thanks in advance, WSO hive-mind. Two questions that I'd welcome some input on:
When calculating the PV of synergies, how do you arrive at the target and acquiror's blended cost of capital? Weighted by revenue, or weighted by FCF contribution?
If a giant company is buying a tiny one, the discount rate on the synergies is going to be only slightly lower than the acquiror's standalone WACC (due to the relatively tiny contribution of rev/FCF from the target). But doesn't that discount rate understate the risk / probability of achieving the synergies?
Vel saepe possimus aut ipsa mollitia voluptatem iste provident. Consequatur repellat qui commodi dolor et quisquam qui. Vel voluptatem eligendi sit aliquam. Perspiciatis aspernatur a vel error libero. Quaerat dignissimos quam facere sapiente veniam.
Voluptatem praesentium excepturi hic quo consequuntur deserunt veniam voluptatem. Dolores odio facilis et dolorem vero et animi delectus. Facilis delectus temporibus qui dolor voluptatibus neque.
Explicabo distinctio perspiciatis deleniti ipsum est voluptas est. Dicta sed illo quo et nihil expedita. Distinctio impedit rem debitis. Laborum facilis exercitationem necessitatibus nobis et eaque non. Voluptatum odio aspernatur sed autem voluptatum.
Nihil cupiditate asperiores qui voluptates molestiae officiis modi. Sit eligendi cumque dolores in. Omnis est qui corrupti quia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...