We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Valuation of Reverse Termination Options in Mergers and Acquisitions.
- Authors
Sekhon, Vijay
- Abstract
This article describes the recent development and increasing use of reverse termination options in acquisition agreements governing private equity leveraged buyouts. It derives a modification of the Black-Scholes option pricing formula for use in estimating the value of such a transaction structure to an acquirer. Relaxing the assumptions underlying the reverse termination option pricing formula as appropriate for a given transaction provides a refined estimate of a reverse termination option's value to an acquirer. Thus, targets can use the reverse termination option pricing formula to evaluate a bid containing a reverse termination option against alternate bids or valuations of the target.
- Publication
Berkeley Business Law Journal, 2010, Vol 7, Issue 1, p72
- ISSN
1548-7067
- Publication type
Article