Which one of the following statements is correct concerning acquisition considerations?
A) The value of a target firm should be calculated ignoring the market valuation.
B) The acquisition analysis should focus on the existing cash flows of the target firm.
C) The acquiring firm's discount rate should be used in the analysis of the merger NPV.
D) Transaction costs and related expenses must be included in the acquisition analysis.
E) The effects of synergy should be ignored in the acquisition analysis.

Question

Quizplus · Accepted Answer

Transaction costs and related expenses are crucial components of the acquisition analysis because they can significantly impact the overall cost and thus the attractiveness of the acquisition. Ignoring these costs could lead to underestimating the total investment needed to complete the acquisition.

Which One of the Following Statements Is Correct Concerning Acquisition