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

Note: Valuing a Business Acquisition Opportunity

Format:Print
| Language:English
| Pages:8

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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