A Valuation Model for International Acquisitions

• Published in: Management decision Vol. 29; no. 4; p. 31
• Main Authors: Madura, Jeff, Vasconcellos, Geraldo M, Kish, Richard J
• Format: Journal Article
• Language: English
• Published: London MCB UP Ltd 01-04-1991; Engineering, Chemical & Marine Press Ltd; Emerald Group Publishing Limited
• Subjects: Acquisitions & mergers; Capital budgeting; Factors; International; Mathematical models; Mergers and acquisitions; Net present value; Salvage value; Studies; Valuation; United States > US; Mergers and acquisitions; Valuation; Capital budgeting
• ISSN: 0025-1747; 1758-6070
• DOI: 10.1108/00251749110002936

The proliferation of mergers during the 70s and 80s has generated
voluminous amounts of research with a primary focus on the impact to the
shareholders from both the acquired and the acquiring firms. Relatively
little research has been placed on the valuation process itself,
especially within the international merger setting. To fill the void,
this article details a valuation process based on capital budgeting.
This approach is designed for use by foreign firms contemplating mergers
or acquisitions across international borders. The framework may also be
used to help explain the increasing numbers of non-US acquisitions of US
firms and to make inferences about divestiture and leveraged buy-out
(LBO) activity.