Question

Which of the following M&A transaction equations is correct? Review Later Value created = Hard synergies + Soft synergies – Transaction costs Value created = Stand-alone value + Net synergies – Transaction costs Value created = Consideration (price paid) + Net synergies – Transaction costs Value created = Stand-alone value + Net synergies – Consideration (price paid)

Answer 1

Answer: Value created = Hard synergies + Soft synergies – Transaction costs

Explanation: M&A transaction equations refers to equations which are used to describe a merging and acquisition process. The value created refers to Return earned from a business beyond initi expectation. Synergies refers to increased efficiency derived from the contribution of resources. It occurs when joint valuation exceeds the sun of each individual's value.

Hard synergies refers to cost saving as a result of pooled resources.

Soft synergies is attributed to increased yield in profit due to higher revenue.

Transaction cost are expenses incurred towards the merging and acquisition process