Corporate Restructuring

Free CFA Level II lesson in Corporate Issuers. 15 min read, ~2,236 words.

Acquirer's gain = PV(synergies) - Premium. The target captures the premium regardless, so synergies alone never justify an acquisition. Bootstrap effect: a high P/E acquirer buying a low P/E target is EPS accretive but creates NO value; a low P/E buying a high P/E is dilutive. HHI shortcut: delta =...