The acquiring firm's existing loan covenants need not be considered in determining the feasibility of acquiring the target firm.
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If the acquisition of the target is believed to be very important to implement the acquirer's strategy, the acquirer should be willing to pay up to the maximum purchase price.
The maximum purchase price is the minimum price plus the present value of sources of value.
Minimum purchase price or initial offer price for a target is the target’s standalone value or market value.
Cost savings are likely to be greatest when firms with dissimilar operations are consolidated.