The purchase of a company by the acquirer through stock presents valuation issues related to the market price of the stock on the date of closing.

Question

Quizplus · Accepted Answer

When purchasing a company through stock, the acquirer must value the target company's shares to determine the exchange ratio. The market price of the acquirer's stock on the date of closing is important because it determines the value of the consideration paid to the target company's shareholders. This presents valuation issues that must be carefully considered.

The Purchase of a Company by the Acquirer Through Stock