Robert A. Bonavito, CPA PC

RABCPA PC Blog

The Importance of Mergers and Acquisitions

You may often wonder why there are so many mergers and acquisitions, hardly a day goes by when you don’t hear of a company merging or acquiring another company. The importance of mergers and acquisitions cannot be understated, it’s an important element of a dynamic economy. The reason that mergers and acquisitions are so important is that it puts assets in the hands of better owners.   Unfortunately, academic studies show that more than 1/3 of acquisitions actually destroy shareholder value. The reason for this is that the acquirer over pays for the acquisition. When this is done the selling company actually receives all the benefits and the acquirer has paid fair market value for the company and receives none. This is one of the reasons why a proper and appropriate valuation is needed when a company is acquiring another company.

Posted July 22, 2017 by Robert A Boanvito in Business Valuations