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Hi Elizabeth. I appreciate you sharing those research findings with the class! When dealing with mergers...

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Accounting

Hi Elizabeth. I appreciate you sharing those research findingswith the class! When dealing with mergers and acquisitions,valuation becomes especially important as the company in theacquiring role wants to be sure to pay a fair price for the othercompany. Now, with that being said, the perceived fair value willoften exceed the value of a company’s net assets thus creatinggoodwill on the books of the acquiring company. Class, when acompany is making an acquisition, what are some reasons why theymight be willing to pay more than the value of a company’s netassets?

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Goodwill is excess of Purchase Consideration paid to the target company for the Net value of their asset Hence goodwill is an intangible asset which can not be touched seen used in business but is inidentifiable from other assets The question arises that why then the company making acqusition is ready to pay for such goodwill 1Market Base The company acquired have its own    See Answer
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Hi Elizabeth. I appreciate you sharing those research findingswith the class! When dealing with mergers and acquisitions,valuation becomes especially important as the company in theacquiring role wants to be sure to pay a fair price for the othercompany. Now, with that being said, the perceived fair value willoften exceed the value of a company’s net assets thus creatinggoodwill on the books of the acquiring company. Class, when acompany is making an acquisition, what are some reasons why theymight be willing to pay more than the value of a company’s netassets?

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