Question

If a business valuation is being conducted for acquisition purposes, it is important to consider which...

If a business valuation is being conducted for acquisition purposes, it is important to consider which of the following changes in the analysis?

Changes in ownership form Changes in operations

Changes in cash flow risk

Changes a. and b. are correct.

Changes a., b., and c. are all correct.

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Answer #1

Answer: 1st option

If one company takes the ownership of other company then this is acquisition. In the process of doing so the acquiring company should do business valuation of the acquired company. This is to be calculated how there is ownership changing because of changing operation. Purchase consideration, value of goodwill, and minority interest should be in this process.

Cash flow risk, which reveals through a cash flow statement, is a normal business finding; this is not a special treatment in acquisition. Therefore, it should not come under acquisition process.

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