Mergers & Acquisitions
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Asset Acquisition: Customer Relationship
Our company is currently acquiring assets of a target company. We intend to acquire specifically, (1) PPE's and (2) customer database. For PPE, we hired a third-party service provider to appraise. For the latter, I used discounted cash flow method, valuation is for 10 years. However, my initial mode...
Our company is currently acquiring assets of a target company. We intend to acquire specifically, (1) PPE's and (2) customer database. For PPE, we hired a third-party service provider to appraise. For the latter, I used discounted cash flow method, valuation is for 10 years. However, my initial model results showed a negative value, primarily because the expenses are greater than the revenue. My question is this. Is it possible for the valuation to be negative? My judgement says that the existing customer base should have value to the buyer, but the calculation says otherwise. Am I missing something here? Should I include the ADDITIONAL customers which we expect to get after the acquisition? Or just their existing customer database? Let me know your recommendations. Thank you very much! :)
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by Randolph B.
added 8 years ago
