Consider the following equation:
The term T in this equation refers to
A) the premerger, or standalone, value of the acquirer.
B) the value of the synergies created by the merger.
C) the premerger (standalone) value of the target.
D) new shares to pay for the target.

Question

Consider the following equation: 
The term T in this equation refers to
A) the premerger, or standalone, value of the acquirer. 
B) the value of the synergies created by the merger. 
C) the premerger (standalone) value of the target. 
D) new shares to pay for the target.

Quizplus · Accepted Answer

The term T in the given equation refers to the premerger (standalone) value of the target. This equation is a common form of expressing the value of a merger or acquisition, where the first part of the equation represents the acquirer's value, the second part represents the target's value, and the third part represents the value of synergies created by the merger. The T represents the premerger value of the target, which is a known quantity, and the equation is used to calculate the implied value of the target based on the price paid by the acquirer.

Consider the Following Equation