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  • January 1989 (Revised October 1993)
  • Background Note
  • HBS Case Collection

Note: Valuing a Business Acquisition Opportunity

By: William E. Fruhan Jr.
  • Format:Print
  • | Language:English
  • | Pages:8
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Abstract

Describes how to value an acquisition opportunity as a capital budgeting problem. Cash flows are discounted at the cost of capital and debt is deducted to value the equity capital of the target company. A key contribution of the note is the discussion of five methods for establishing a terminal value for future cash flows extending beyond the normal planning horizon.

Keywords

Valuation; Acquisition; Opportunities

Citation

Fruhan, William E., Jr. "Note: Valuing a Business Acquisition Opportunity." Harvard Business School Background Note 289-039, January 1989. (Revised October 1993.)
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About The Author

William E. Fruhan

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Related Work

    • June 1998
    • Faculty Research

    Note on Alternative Methods for Estimating Terminal Value

    By: William E. Fruhan Jr.
Related Work
  • Note on Alternative Methods for Estimating Terminal Value By: William E. Fruhan Jr.
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