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Can we perform a "Net Present Value (NPV) Analysis" to evaluate the feasibility of an acquisition or propose merger?

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Question ajoutée par Utilisateur supprimé
Date de publication: 2014/08/31
Hashim Rizvi
par Hashim Rizvi , Financial Controller , Houri Hearing Establishment

Yes, it is quite reasonable to perform, as it will explain future economic inflow after deducting purchase cost as well as performance strength of acquisition or meger.  But there are some inherent demerit of this analysis includes, by passing enviromental factor i.e "PESTAL Analysis" , availablity of sources to run working capital, management synergies (May have positive of negative effect) and etc.

Overall, we can conclude NPV help management in important decision making like acquisistion, introduction of new product line and etc.

Kashif  Saghir
par Kashif Saghir , Finance Manager , Adil Trading Company

Yes we can, for this purpose we can develop a present value model that explain the sources of economic gains that can be attain through mergers. This model identifies major sources of value in mergers, each of these sources can reduce or contribute to the combined wealth effect of takeover deal. The overall value of deal is sum of the impacts of these factors on combined value.

Tamer Elbeshbishy
par Tamer Elbeshbishy , Financial and Administration Manager , Muscat Towers Holding Group

 

 

 

Of course Yes. NPV or Net Present value Analysis is the major way to be used in such capital budgeting decisions like this . To measure such inflows from the project and Outflows as Well and to see the impact and decide what to do. 

Aziz ur Rehman ur Rehman
par Aziz ur Rehman ur Rehman , Assistant Manager Finance , Central Power Puchasing Agency (CPPA)

Yes we can use the NPV 

Net Present Value (NPV) Analysis

 The methods used to value companies in a merger and acquisitions (Merger and acqustion . It provides a detailed description of the discounted-cash-flow (DCF) approach 

 

other methods of valuation

such as market multiples of peer firms, book value, liquidation value, replacement cost, market value, and comparable transaction multiples. 

 

Kamran Anjum
par Kamran Anjum , Head of Internal Audit , Rafhan Maize Products Company limited, Faisalabad, Pakistan, Ingredion Incorporated Gmbh

Yes we can.

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