Mergers & Acquisitions
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Question: am I correct to calculate terminal value of the SG&A savings as = [$250mm pretax SG&A savings] * (1- tax rate) * (10x terminal multiple)?
Rationale for tax-effecting the SG&A synergies: I want to take the Total Present Value of Synergies (which = Present Value of Year 1 through 5 Synergies + Terminal Value of Synergies), and divide that by Target shares outstanding, to show Synergies Per Share. Then I’m going to add that Synergies per share number to the Target’s Standalone Equity Value per share to show “Maximum Value of Target Per Share.”
Is this correct? Read More