Jeff Madura, Geraldo M. Vasconcellos and Richard J. Kish
The proliferation of mergers during the 70s and 80s has generatedvoluminous amounts of research with a primary focus on the impact to theshareholders from both the acquired and…
Abstract
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.