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Technology Stocks : Ascend Communications (ASND)
ASND 212.33+1.1%Nov 28 9:30 AM EST
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To: Chuzzlewit who wrote (26701)12/6/1997 7:30:00 PM
From: john dodson  Read Replies (1) of 61433
 
Karl, it all depends upon what the acquirer sees in the merger. If the acquiring company is astute, it will pay less than the present value of the incremental cash flows provided by the merged firm

My confusion with the net present value of the cash flow stream of
the merged company is this: How many years out do you include in
the analyis? Granted the further out you go, the less reliable, but
providing a merger did occur, in all liklikhood they would stay
merged forever, thereby creating a perpetuity, right?

So, based on how far out you go, you get totally different valuations
for the company. That's where I get lost.

-John Dodson
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