Firmex allows that in the fast-paced world of M&A dealmaking, the issue of valuation can be a huge challenge. The price that one buyer is willing to pay could be tens or even hundreds of millions of dollars different than what someone else is ready to offer. In this report, dealmakers share their experiences and opinions about this crucial phase of the M&A process.
In M&A negotiations, the issue of valuation is typically the most important of all. And the central question facing acquirers is not necessarily, “How much is this asset worth?” Instead, the question they must answer is: “How much are we willing to pay for this?” The reasons for this distinction are understandable. After all, an accurate
valuation can be extremely difficult to calculate. This is especially true for outlier targets – take the recent example of ride-sharing giant Uber. Japanese tech conglomerate SoftBank has expressed its interest in buying as much as 22% of the company, for up to US$10 billion. The catch is that SoftBank’s offer would value the company 30% lower than its last valuation, of around US$70 billion. Uber attained this valuation by impressing investors with non-stop growth – despite also sustaining billions of dollars in net losses.
Read on in the rather extensive coverage of M&A issues covered by this article.
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