The purpose of this study is to develop a valuation framework for mergers and acquisitions by explicitly incorporating the synergy effect of mergers. Based on the real options approach, we introduce the upper and lower bounds of terms for an acquirer that makes a merger profitable to both the...

What is the value of a closely-held corporation that does not engage in ongoing service activities but owns $100 million worth of assets that it initially purchased for $20 million? When a corporation does not engage in ongoing service activities but owns property, its value depends on the value...

The empirical analysis of new warrant issues in the context of a structural model of the firm typically assumes the absence of debt and a perfect equity pricing model. We examine here an approach relaxing these two assumptions. The proposed approach develops simple analytical expressions for the...

In this paper, we promote the approach of relative indifference pricing as a conceptual enhancement of real options theory whenever incompleteness comes into play. As until now the discussion of this concept is limited to the field of mathematical finance, our goal is to stimulate its diffusion...