Topic 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.

    • The section's reading assignment and review questions are listed below:

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      The following online tool allows you to quickly assess the valuation, value-allocation, and ownership implications of M&A deals: