Module V· Contribution Analysis & Shareholder DilutionAdvanced
Question

How do you treat implied sharing of synergies between acquirer and target shareholders?

Answer

In stock deals, synergy value is shared through the exchange ratio and pro-forma ownership. Compare target premium with PV of synergies. If target shareholders receive a large premium but retain ownership in the combined company, they may capture both upfront premium and future synergy upside. Bankers show synergy sharing to assess fairness and negotiation room.