acquisition premium

acquisition premium definition - business

acquisition premium

The difference in the amount offered by the acquirer and the preacquisition valuation of the firm being acquired. For example, offering $150 million for a firm with a market value of $110 million involves an acquisition premium of $40 million. An acquisition premium helps convince managers and owners of the firm to be acquired that it is in their financial interest to approve the acquisition. A large acquisition premium is likely to deter other potential suitors.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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