Hey guys - What's a "sensible" acquisition premium? I know what's an acquisition premium but never heard of sensible acquisition premium
Cheers
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To be honest, arguably, the answer is zero. I don’t know why I would ever pay a premium to what a target is worth (if I was a business owner) with a few exceptions
There’s a value to having complete control over a company, vs just having a minority stake….
That’s what bankers want you to believe
In my opinion this reasoning holds when you think that the price is the value you, business owner, attribute to the business you are buying. If you think about an "intrinsic" price for the company, there is always a premium/discount based on what the acquirer can do with it.
Lol the seller would never sell without a premium. A premium isn’t paid because the buyer wants to pay it, but bc buyer has to in order to incentivize the seller to sell. Otherwise the target would simply continue operating and accrue the value themselves.
Typical reply from a banker who never actually ran a business. If all sellers knew how to accrue value themselves, there would have been no distressed companies
no. my point was that a seller wouldn't sell at a zero % premium unless they're about to hit an iceberg (presumably that would be uncovered in diligence or they get sued to the gills after the fact). there's no incentive for them to sell, otherwise
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