Explain the pros and cons of an asset deal

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Reference no: EM131603854

Explain when cash is preferred and when stock is preferred in consummating deals. Explain what an earn out agreement is and how it shares the risk of a merger deal between the target and acquirer?

Explain what is a contingent payment, why is it used and what are the common types of contingent payments.

Explain the pros and cons of an asset deal.

As an analyst, you need to calculate the maximum number of acquirer shares that can be offered for each target share without diluting the forecasted acquirer's EPS. The tax rate is 20%. No debt is issued for this merger. Acquirer NI 60 Acquirer shrs 5 Target NI 91 Target shrs 7 All numbers are in millions. Note you will have to compute EPS before answering this question.

As an analyst, you need to calculate the combined earnings of a proposed merger between the Chocolatte and Bute Peanutt firms. Assume the merger is financed by debt of $20 million at 5%. The tax rate is 20%. Chocolatte NI 59 Bute Peanutt NI 40.

Reference no: EM131603854

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