During the course of M & A exercise, we often encounter the needs to value the securities of the acquired company.

As we know there are various methods of valuing securities and the more common ones are as follows:

• Based on stock market quotation;
• Net assets or Balance Sheet basis;
• Yield bases ( both dividend and earning yield)
• Revenue or earning capacity basis

The method employed will depend on the particular securities being valued and the purpose of the valuation. Furthermore, there is a need to be cautious that the various method might overlap.

However, before even we discuss the value set upon the securities, we need to consider some of the other following factors that can influence the final price which are:

• Dividend yield;
• Earning yield or
• Price –earning;
• Prospects of the company;
• Value of the company’s net assets;
• Company’s capital commitments and any expansion programme contemplated;
• Industrial or commercial prospects of the company’s field of operation;
• Position and prospects of subsidiary or other companies in which the company has made investments;
• Budget, or estimated budget changes;
• Composition of the company’s board of management;
• Prospect of foreign action likely to affect the company’s trading prospects and
• Political and economic scenario of the country in which the company resides.

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