University of Oulu

Valuing companies in M&A situations : a study of Finnish small & middle-sized companies

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Author: Viren, Visa-Tapio1
Organizations: 1University of Oulu, Oulu Business School, Department of Finance, Finance
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 1.3 MB)
Pages: 86
Persistent link:
Language: English
Published: Oulu : V.-T. Viren, 2014
Publish Date: 2014-01-21
Thesis type: Master's thesis
Tutor: Lehenkari, Mirjam
Reviewer: Moilanen, Sinikka
Lehenkari, Mirjam
The goal of this study is to examine valuation in small and middle-sized, private companies’ mergers and acquisitions in Finland. This study attempts to answer the following questions: How are companies valuated in M&A in the small and middle-sized, private firm context? What are the most critical issues affecting valuation and M&A processes in this context? This research uses qualitative methods as information gathering from private companies is challenging. These methods enable to reflect issues of interest even on a small sample. We use method triangulation as the topic is studied by numerous procedures. First, there’s a questionnaire directed for companies involved in M&A. Second, the results from the first phase are presented to experts who give their own opinions on the matter. Finally, previously gathered views are scrutinized with academic outlook. Therefore this study attempts to create a discussion between academics and practitioners on the matter of valuation in small, private company M&A. Results of this paper are ample. Valuation should be seen as a part of the M&A process and this procedure should be properly planned and executed in order to harness the expected value. There are many ways to derive a value for the target and one can’t unambiguously determine the best method. The selection of the method depends on the expertise of the analyst and on the information available. There are special issues in private company valuation. The unreliability of the information used in valuation and personification of the company should be taken into consideration. Availability of funds for the transaction has also crucial role on the process. The results of this study should not be completely removed from their context as qualitative methods usually resemble case studies. This research provides guidelines for future work on this issue, as similar studies made with this research structure have apparently not been done. For a company involved in M&A this paper gives information on where to focus in the process.
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