Merger Synergy Valuation
  • Merger Synergy Valuation
Originally published: 17/06/2016 13:39
Publication number: ELQ-90266-1
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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!

download for free


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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