That the company pays for the acquisition target in a merger or acquisition is called "consideration." Consideration may be in the form of cash, shares or a combination of the two. Sets out the basic mechanics of the consideration shares. Derivative of the formula for the NPV of the transaction all the shares of the transaction, and shows how to calculate and interpret the key parameters, including the percentage of ownership, the exchange ratio, the acquisition premium, wealth transfer and the lack of defense. Explains how the interaction and over-valued exchange rate affects the stock NPV. It also shows how to calculate the critical break-even exchange ratio. Looking at the end of the cash and stock deal. "Hide
by Carliss Y. Baldwin Source: Harvard Business School 17 pages. Publication Date: October 25, 2007. Prod. #: 208077-PDF-ENG
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