LO1. Firms engage in mergers for financial motives and to increase operating efficiency. Tax benefits and other factors must also be considered.

Part A: What is a typical merger premium paid in a merger or acquisition? What effect does this premium have on the market value of the merger candidate, and when is most of this movement likely to take place? (LO20-1)

Part B: Explain how you would use this information as the VP of Finance.