Question:

Why does goodwill get created in an acquisition?

Answer hidden.

Answer:

Goodwill is created when a buyer acquires a company for more than "fair market value." It is calculated by subtracting the book value of the seller from its equity purchase price.

In other words, Goodwill and other intangible assets represent the valuable things that do not show up on a company's balance sheet such as the company's brand recognition, intellectual property, customer relationships, copyrights, etc.

Other

Merger Model

Walk me through a basic merger model

Merger Model

A company with a higher P/E multiple acquires one with a lower P/E multiple. Is this deal accretive or dilutive?

Merger Model

Why would a strategic acquirer typically be willing to pay more for a company than a private equity firm?

Merger Model

In an all-stock deal, how can you quickly tell if a deal will be accretive or dilutive?

Merger Model

Question:

Why does goodwill get created in an acquisition?

Answer:

Other

Merger Model

Walk me through a basic merger model

A company with a higher P/E multiple acquires one with a lower P/E multiple. Is this deal accretive or dilutive?

What are some reasons for why a company would want to acquire another company?

Why would an acquisition be dilutive?

What are synergies? What kinds of synergies are there?

What is the difference between a merger and an acquisition?

Why would a strategic acquirer typically be willing to pay more for a company than a private equity firm?

In an all-stock deal, how can you quickly tell if a deal will be accretive or dilutive?

Is there a shortcut to determine whether a transaction is accretive or dilutive to shareholders?

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