QUESTIONS FOR CORPORATE FINANCIERS: What extra information does your MD need to determine whether to go ahead with this acquisition?

1. Don't pay for the synergies
2. Size of the business 10m p.a. synergies on a 50bn business is useless
3. Nowhere near enough information to get remotely close to making a recommendation

.I'm getting seriously fed up of Ali's small provincial town

In a nutshell and to make it simple, if it is a publicly traded company, what the market values the company at (PE or Ebitda multiple). If the market values the extra 10m in perpetuity at a multiple of 10x say, than it is indifferent to the transaction which costs 100m. If the company trades at 20x P/E, than you have created 200m of value worth more than the 100m acquisition cost.

For real? Pretty good deal because synergies will be on top of what assets are worth. E.g. assume a break up value as low as 20m. Discount rate (assume not some crazy business in Pakistan) needed to break even is that which results in 10/(discount rate - terminal growth rate) being 80m. Assume terminal growth rate is 2%, discount rate needs to be 12% even in this case. Now, in reality the 100m will never be predicated so much on upside / synergies (i.e. standalone business will be worth more than 20m as above) so this is fab...

Assuming the synergies are on the operational level, you will need to know the project's expected return on assets