Mergers and Acquisitions (M&A)
Section outline
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This section presents a simple model that allows us to better understand the relevance of the deal structure (in particular, how much and how to pay) for the actual value of a deal.
We also discuss how this deal structure determines the allocation of value, ownership, and risk among the deal parties, and how it helps us to predict the stock-market reaction to the announcement of an M&A transaction.
Finally, we apply this simple model to a recent M&A transaction in the software sector to see how to interpret the actual stock market reaction to a deal announcement.