What is the exchange ratio?

The exchange ratio is a financial calculation of a relatively specific intention, which is generally used only when one publicly owned society is the aim of the acquisition of another. From a technical point of view, it is the number of shares in a new company that the shareholder can expect to receive in exchange for his shares in the old company. In principle, the exchange ratio attempts to take into account the differences in the current risk between two merged companies. In general, the valuation of shares is carried out by third -party brokers to determine the price of an individual share for both companies and are listed in the contract between the two companies. Brokers usually charge the percentage of the total total number of transactions as payments. In many cases, in many cases the highest number of fractions, known as the numerator , is average per share of one of the companies - and the lower number, denominator , is the initial price of the public offer (IPO) of the other company. However, this is hardly the rule and it is to negotiate the conditions of the exchange after the companies themselvesthe meal. Other factors that can play a role in determination include, but are definitely not limited, an outstanding number of shares, an outstanding debt, the market value of any capital and cash flow.

usually have shares of the target company a premium price over what the value of the company's shares itself would sell when trading open. This is generally done as a way to sweeten the agreement for shareholders who may otherwise be restrained about the transaction. Ten to 20% is not uncommon, although higher and lower offers can be submitted depending on the circumstances of a specific offer. Participants on both sides of the Ultimatela Vote whether or not to accept the agreement, and shares are sold in bulk to complete the acquisition.

According to the nature of the exchange rate, it is not used if a private company involved in a transaction because they are not publicly traded and have no shareholders. In such cases withE Accounting attempts to evaluate the assets of private companies, sales, loans or bonds and other criteria to determine a pleasant purchase price. In this case, it is rather than shareholders to owe the company to decide on sale.