M&A valuation for going concern: A case study using Samsung electronics’ adjusted EBITDA Multiple
AbstractThis study analyzes the limitations of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) Multiple from the perspective of the going concern principle. A new Adjusted EBITDA Multiple that complements the limitations of the EBITDA Multiple is generated and applied to real...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2023-12-01
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| Series: | Cogent Business & Management |
| Subjects: | |
| Online Access: | https://www.tandfonline.com/doi/10.1080/23311975.2023.2209975 |
| _version_ | 1797265292396593152 |
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| author | Jee Woung Hong Jan Erik Meidell Hyun-Jung Kim |
| author_facet | Jee Woung Hong Jan Erik Meidell Hyun-Jung Kim |
| author_sort | Jee Woung Hong |
| collection | DOAJ |
| description | AbstractThis study analyzes the limitations of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) Multiple from the perspective of the going concern principle. A new Adjusted EBITDA Multiple that complements the limitations of the EBITDA Multiple is generated and applied to real-world cases for comparison. EBITDA Multiple is used to assess if the target company is undervalued or overvalued; adjusted EBITDA Multiple is used to determine the time taken to recover the total acquisition cost of a company in an M&A transaction. Samsung Electronics, South Korea’s leading tech firm, is used as a case study to analyze financial information between 2017 and 2021. The result varied with the M&A decisions. Investment decisions in M&A are made considering the assets (debt + capital) to be assumed with the acquisition and additional investment costs for the target’s sustainable management. We propose a new valuation method for recovering M&A investment costs, considering the long-term sustainable growth of the acquired company. |
| first_indexed | 2024-03-07T14:19:57Z |
| format | Article |
| id | doaj.art-f99c71cfd59a4baca2ce0bc927963426 |
| institution | Directory Open Access Journal |
| issn | 2331-1975 |
| language | English |
| last_indexed | 2024-04-25T00:42:29Z |
| publishDate | 2023-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Business & Management |
| spelling | doaj.art-f99c71cfd59a4baca2ce0bc9279634262024-03-12T08:30:26ZengTaylor & Francis GroupCogent Business & Management2331-19752023-12-0110210.1080/23311975.2023.2209975M&A valuation for going concern: A case study using Samsung electronics’ adjusted EBITDA MultipleJee Woung Hong0Jan Erik Meidell1Hyun-Jung Kim2Business Administration, Seoul School of Integrated Sciences & Technologies, Seoul, South KoreaBusiness Administration, Business School Lausanne, Lausanne, SwitzerlandDepartment of IT Finance, College of Business Administration, Jeonju University, Jeonju, South KoreaAbstractThis study analyzes the limitations of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) Multiple from the perspective of the going concern principle. A new Adjusted EBITDA Multiple that complements the limitations of the EBITDA Multiple is generated and applied to real-world cases for comparison. EBITDA Multiple is used to assess if the target company is undervalued or overvalued; adjusted EBITDA Multiple is used to determine the time taken to recover the total acquisition cost of a company in an M&A transaction. Samsung Electronics, South Korea’s leading tech firm, is used as a case study to analyze financial information between 2017 and 2021. The result varied with the M&A decisions. Investment decisions in M&A are made considering the assets (debt + capital) to be assumed with the acquisition and additional investment costs for the target’s sustainable management. We propose a new valuation method for recovering M&A investment costs, considering the long-term sustainable growth of the acquired company.https://www.tandfonline.com/doi/10.1080/23311975.2023.2209975M&Amp;AvaluationEBITDA multiplegoing concernM&A considerationG30 |
| spellingShingle | Jee Woung Hong Jan Erik Meidell Hyun-Jung Kim M&A valuation for going concern: A case study using Samsung electronics’ adjusted EBITDA Multiple Cogent Business & Management M&Amp;A valuation EBITDA multiple going concern M&A consideration G30 |
| title | M&A valuation for going concern: A case study using Samsung electronics’ adjusted EBITDA Multiple |
| title_full | M&A valuation for going concern: A case study using Samsung electronics’ adjusted EBITDA Multiple |
| title_fullStr | M&A valuation for going concern: A case study using Samsung electronics’ adjusted EBITDA Multiple |
| title_full_unstemmed | M&A valuation for going concern: A case study using Samsung electronics’ adjusted EBITDA Multiple |
| title_short | M&A valuation for going concern: A case study using Samsung electronics’ adjusted EBITDA Multiple |
| title_sort | m a valuation for going concern a case study using samsung electronics adjusted ebitda multiple |
| topic | M&Amp;A valuation EBITDA multiple going concern M&A consideration G30 |
| url | https://www.tandfonline.com/doi/10.1080/23311975.2023.2209975 |
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