Paying a premium over the current market price to gain control, which is often justified by the anticipated synergies. 3. Implementing DCF and Multiples
Determining how to allocate or value corporate headquarters costs. B. Valuation of Mergers and Acquisitions (M&A) corporate valuation holthausen pdf 17
Unlike academic purists who dismiss multiples, Holthausen and Zmijewski embrace — provided you understand when the market is irrationally high or low. They introduce the “residual income model” (RIM) as a bridge between accounting and market value. Paying a premium over the current market price
Holthausen and Zmijewski argue that net income is a poor valuation starting point because of accruals, depreciation methods, and one-time items. Instead, focus on adjusted for maintenance capex — i.e., free cash flow to the firm (FCFF) . and one-time items. Instead