Acquisition Analysis Tutorial

The purpose of this tutorial is to provide the framework as well as the tools to conduct a proper quantitative analysis of acquisition opportunities. Initially, the various reasons why a company may want to engage in an acquisition will be explored and critiqued, and the importance of “synergy” in determining the ultimate value of an acquisition will be addressed. The next section of the tutorial will address how acquisitions can be quantified and valued using a Free Cash Flow approach. In this section, we will address the quantification of total value received versus total value paid, and the determination of whether value is either created or destroyed for the acquiring company’s shareholders. The last section of the tutorial will address how acquisitions can be alternatively quantified and valued using an Economic Profit approach.