What factors are Determinable for the Price of a Firm for Acquisition?

1) Net Worth.

2) Past3 Year Balance Sheet & P&L Accounts.

3) Intangible Assets like Licenses, Permits, Brand Value etc.

4) SWOT Analysis of Company.

1) Simplest rationale is undervaluation, i.e., that firms that are undervalued by financial markets, relative to true value, will be targeted for acquisition

by those who recognize this anomaly.

(2) A more controversial reason is diversification, with the intent of stabilizing earnings and reducing risk.

(3) Synergy refers to the potential additional value

from combining two firms,either from operational or financial sources.

•Operating Synergy can come from higher growth or

lower costs

•Financial Synergy can come from tax savings, increased

debt capacity or cash slack.

(4)Poorly managed firms are taken over and restructured by the new owners,who lay claim to the additional value.

(5) Managerial self-interest and hubris are the primary, though unstated, reasons for many takeovers.

1- Market share2- Financial capability3- Technical capability4- Know-how

Usually more than one method. First could be the Total market value for the fixed assets owned by the company and not as presented in balance sheet. as it is presented in historical cost , which is totally different . This could be against the total liabilities as calculated in the balance sheet.

Second method, is the total market values of the securities of this company in the market, which will be affected with the profit or loss of the company and it`s financial position. 

Partly I agree with some of the answers. But generally, as acquisition necessary happens after mergery, the stronger company byes off the weaker company, so the factors that influence the price are connected with the terms under which mergery was initially done, and can be variable from case to case...

Thank you for the invitation. I believe the factors determining the price are1) The line of business and the growth prospects in future,2) The reputation (goodwill) earned by the firm and its customer base3) Past and future cash flows4) The market in which the firm operates and its selling prepositions,5) Human resource capabilities etc..

Net worth

Future perspectives

Assets

Staff

I support the answer of Mr. Ramendra Sunder Sinha