MISVALUATION: ANOTHER EXPLANATION FOR THE FAILURE OF CORPORATE ACQUISITIONS

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Abstract

Every year growth strategies of corporations mean that billions of dollars of acquisitions are approved by boards and senior executives. Yet studies show that 50 percent or more of these acquisitions are unsuccessful. What goes wrong? In this article I argue that much of the blame for these well documented failures stems from weaknesses with the standard valuation methods themselves and the difficulties with implementing the methods. By focussing on the role of the CEO and boards, I suggest a number of steps that could reduce the frequency and size of these failures.

Keywords: Corporate Acquisition, Standard Valuation Methods, CEO, Board of Directors

How to cite this paper: Price, J. (2013). Misvaluation: another explanation for the failure of corporate acquisitions. Corporate Ownership & Control, 11(1-9), 777-788. https://doi.org/10.22495/cocv11i1c9art2