Author:
Joseph
Nacmias (CPA)
McGladrey & Pullen, LLP., Certified Public Accountants
750 3rd Avenue, New York, NY 10017
Telephone: (212) 297-4888 / Fax: (212) 972-9088
E-Mail: Joseph_Nacmias@rsmi.com
/ http://www.mcgladrey.com
In many purchases there will be savings from the effects of business synergies or plain cost reductions (see 2.2). The purchaser’s operating executives (with assistance by the auditors) should make careful projections of the savings and the present value of their effect. Savings are often dramatic when the purchaser is already engaged in the target’s line of business and is adding capacity or market share. Ordinarily purchasers of companies will not “pay” for the expected savings from synergies but will have an amount in mind during the negotiating process as an expected reduction of the purchase price.
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