Merger Synergy Valuation

This model estimates the value of synergy in a merger.

combined firmindependent firmsmergerssynergyvaluation

This simple excel model enables you with the beta, pre-tax cost of debt, tax rate, debt to capital ratio, revenues, operating income (EBIT), pre-tax return on capital, reinvestment rate and length of growth period to compute the Value of the global synergy in a merger.

Note: this model is being shared with the authorization of Professor Aswath Damodaran from NYU Stern Business School (

This business tool includes
1 Excel Model File

Prof. Aswath Damodaran offers you this business tool for free!

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Further information

The objective of this model is to get the following output values for the acquiring firm, target firm and merged firm:
- Cost of Equity
- After-tax cost of debt
- Cost of capital

- After-tax return on capital
- Reinvestment rate
- Expected growth rate

- Present Value (PV) of Free Cash Flow for the Firm (FCFF) in high growth
- Terminal value
- Value of firm today

Value of synergy:
- value of independent firms
- value of combined firm
- value of synergy


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