Valuation of mergers and acquisitions: A case study of determinants underlying in valuation processes
| dc.contributor | Aalto-yliopisto | fi |
| dc.contributor | Aalto University | en |
| dc.contributor.advisor | Teerikangas, Satu | |
| dc.contributor.author | Kullberg, Niklas | |
| dc.contributor.department | Tuotantotalouden laitos | fi |
| dc.contributor.school | Perustieteiden korkeakoulu | fi |
| dc.contributor.school | School of Science | en |
| dc.contributor.supervisor | Laamanen, Tomi | |
| dc.date.accessioned | 2020-12-23T17:31:50Z | |
| dc.date.available | 2020-12-23T17:31:50Z | |
| dc.date.issued | 2011 | |
| dc.description.abstract | The thesis studies valuation processes of mergers and acquisitions (M&As). Valuation is one of the key analyses justifying M&As. Wrong expectations of the value of an acquisition can in the worst case lead to a wrongfully justified acquisition resulting in value destruction. Hence, the question of how to conduct an accurate and unbiased valuation is essential to practitioners of M&As. The current research is lacking a holistic perspective on valuation processes. Academic research is mainly focused on explaining valuation techniques and describing the role of valuation in deriving a price range for negotiations. Little, if any, research has explained how cognitive biases and other underlying determinants influence M&A valuation processes and their impact on decision making. The aim of this thesis is to derive a holistic view on valuation processes of M&As and to give concrete recommendations to the case companies by answering the research questions of (Q1) which are the underlying determinants influencing a valuation process, and (Q2) what is the role of the valuation process in supporting decision making in a pre-acquisition process. The research is conducted in two main parts: the theoretical part and the empirical part. By synthesizing the literature of strategic decision making processes, pre-acquisition processes, valuation, and cognitive biases in M&As, a holistic view on cyclical iterative valuation processes is developed which incorporates phases, elements, and underlying cognitive biases. To specify and validate the pieces of a holistic valuation framework, the empirical part is conducted as a multiple case study of two pre-acquisition valuation processes of a software company and one pre-acquisition valuation process of an industrial company. The data was collected in two phases. During the first phase the author was an observer in the software company. During the second phase, interviews were conducted in the industrial company and the software company. In total 14 persons were interviewed for the study, including four practitioners outside the cases for an external opinion. In addition, several due diligence reports, presentations, valuation sheets, and external material of the acquisitions were reviewed. This thesis contributes to theory by explaining how several cognitive biases and other underlying determinants influence different phases of valuation processes of M&As. While M&A valuation literature emphasizes the theoretical soundness of valuation models, this thesis demonstrates how important it is to have control over the psychological forces biasing valuation outputs towards optimism. This thesis also recognizes that clear investment rules restrain optimism from the bid price decision, and that valuation is a helpful tool for integration planning and understanding the target's business drivers. Finally, this thesis contributes to the case companies by providing concrete recommendations regarding valuation processes based on the findings of the research in order to support decision making in the future. | en |
| dc.format.extent | 156 + [16] | |
| dc.identifier.uri | https://aaltodoc.aalto.fi/handle/123456789/99424 | |
| dc.identifier.urn | URN:NBN:fi:aalto-2020122358251 | |
| dc.language.iso | en | en |
| dc.programme.major | Yritysstrategia ja kansainvälinen liiketoiminta | fi |
| dc.programme.mcode | TU-91 | fi |
| dc.rights.accesslevel | closedAccess | |
| dc.subject.keyword | cognitive biases | en |
| dc.subject.keyword | diskonterat kassaflöde | sv |
| dc.subject.keyword | discounted cash flow | en |
| dc.subject.keyword | företagsförvärv och fusioner | sv |
| dc.subject.keyword | mergers and acquisitions | en |
| dc.subject.keyword | företagsförvärvsprocess före avtalsslut | sv |
| dc.subject.keyword | M&As | en |
| dc.subject.keyword | kognitiv snedvridning | sv |
| dc.subject.keyword | pre-acquisition process | en |
| dc.subject.keyword | underliggande determinanter | sv |
| dc.subject.keyword | underlying determinants | en |
| dc.subject.keyword | värderingsprocess | sv |
| dc.subject.keyword | valuation process | en |
| dc.title | Valuation of mergers and acquisitions: A case study of determinants underlying in valuation processes | en |
| dc.title | Värdering av företagsförvärv och fusioner; En fallstudie om underliggande determinanter i värderingsprocesser | sv |
| dc.type.okm | G2 Pro gradu, diplomityö | |
| dc.type.ontasot | Master's thesis | en |
| dc.type.ontasot | Pro gradu -tutkielma | fi |
| dc.type.publication | masterThesis | |
| local.aalto.digiauth | ask | |
| local.aalto.digifolder | Aalto_00499 | |
| local.aalto.idinssi | 42700 | |
| local.aalto.openaccess | no |
