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dcf & transaction multiples

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    • Thread Starter

    So my question is this,Why are acquirers willing to pay more than the DCF value to acquire a target company, especially when the DCF accounts for the intrinsic value of a company as it is the present value of all the cash flows expected to be generated by the company and as the DCF implicitly accounts for the control premium when industry average growth rates, capital structures and margins are used in forecasts?Thanks

    Bcuz Forecasts are forecasts. some are more optimistic, thus more inclined to pay more.
    Valuation is just an estimate. you can't know before the fact what the company was actually worth.
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