--%>
Assignment Help - homework help

Financial problem regarding acquistion of company

My Company paid an extremely higher price for the acquisition of other company; the price was recommended through the valuation of an investment bank. Now we have financial problems. So is there any way to make this bank legally responsible for such situation?

E

Expert

Verified

I must say no. The investment bank does a valuation as per to the expected value of the flows the company could produce and its risk. What an investment bank gives is a valuation and not a “price of valuation.” There responsibility for the price lies along with the company that realizes the offer.

To assign a valuation a frequent error is to an investment bank without getting involved and only waiting for the valuation report. Evidently, such a valuation considers only the value of the company as per to the investment bank’s forecasts upon the economy, the company and the sector and according to the risk estimation of the company, also realized through the investment bank. A helpful and relevant valuation to the executives of a company depends upon the expectation of these executives.

   Related Questions in Corporate Finance

  • Q : Calculating Super normal profit The

    The case study of an economic analysis is done for Schlumberger, oilfield Service Company.  They are No. 1 in terms of market caps, revenue and employees globally. When any references are used/outside sources (except for Schlumberger's annual reports and financia

    		•
  • Q : Historical return on stock market and

    The market risk premium is difference among the historical return upon the stock market and the risk-free rate, for yearly. Why is this negative for some years?

    		•
  • Q : Explain company creates value for its

    Is this true that a company creates value for its shareholders in a year when this distributes dividends or when the quotation of the shares increases?

    		•
  • Q : What is the sales of the firm The

    The financial ratios of a firm are as follows. Current ratio = 1.33 Acid-test ratio = 0.80 Current liabilities = 40,000 Inventory turnover ratio = 6  What is the sales of the firm?

    		•
  • Q : Investors are irrational or naive

    Explain how companies with substandard financial history can draw the attention of investors. Are investors irrational or naive?

    		•
  • Q : Define stock variable Stock variable :

    Stock variable: It is a variable whose value is measured or evaluated at a point of time.

    		•
  • Q : Abnormal profits based on fundamental

    If it is possible to make abnormal profits based on fundamental analysis, you can conclude that the market is: A) Not weak-form efficientB) Weak-form efficientC) Not semi-strong-form efficientD) Semi-strong-form e

    		•
  • Q : Which currency is utilized in an

    Which currency has to be utilized in an international acquisition in order to compute the flows?

    		•
  • Q : Discretion can distort results Discuss

    Discuss how management’s discretion in applying accounting rules can mislead investors. Provide three examples and how the discretion can distort results?

    		•
  • Q : Explain the way of estimating an average

    Explain the way of estimating an average.

    		•