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The effect of acquired company EBITDA on the deal value within M&A context: A study on the Pharmaceutical sector
Jönköping University, Jönköping International Business School, JIBS, Economics.
Jönköping University, Jönköping International Business School, JIBS, Economics.
2019 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

This thesis examines the impact of the valuation multiple ‘earnings before interest, taxes, depreciation and amortization’ (EBITDA) on the ‘merger and acquisition’ (M&A) activity and deal value. For small firms, mergers are primarily an exit strategy for firms in financial trouble, as indicated by few marketed products and low cash-sales ratios. Meanwhile, mergers and acquisitions for large drug makers is a way to leverage their sales networks and benefit from monopolies from patents. The paper analyses the impact size of EBITDA, assuming it is positive and smaller than 8% of the deal value. This thesis examines 46 cases within European Union for a period of 10 years between 2009 to 2018. The conclusion reached is that EBITDA valuation multiple has a significant negative impact on the purchase price but with little effect in the pharmaceutical industry as the focus is always put on the operational synergies that the target’s assets can bring compared to its earnings and sale prowess.

Place, publisher, year, edition, pages
2019. , p. 43
Keywords [en]
Merger, Acquisition, Pharmaceutical, EBITDA multiple, Deal value, Synergy
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-44343ISRN: JU-IHH-NAA-1-20190139OAI: oai:DiVA.org:hj-44343DiVA, id: diva2:1322739
Subject / course
JIBS, Economics
Supervisors
Examiners
Available from: 2019-06-20 Created: 2019-06-11 Last updated: 2019-06-20Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
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