Acquisition Strategy and Real Options

This paper presents strategic level real options that acquiring companies have in the corporate acquisitions process. The real options presented are different from those residing within the acquisition candidate companies as stand-alones. The paper further presents acquisition synergies as real options and as sequential real options to acquisition timing, and the rather special case of acquiring businesses with divestible non-core assets. Models for the valuation of the aforementioned real options are discussed with special focus on input variable values. The paper illustrates the non-core business acquisition issue with a case of acquisition and partial divestment of Partek by Kone