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Looking at the Evidence

In this section, you will begin with an analysis of how the announcement of an acquisition affects the market price of the target and acquiring firms on the day of the acquisition, and follow up by looking at the post-acquisition performance (operating and stock price) of acquiring firms.

Acquisition Date

The big price movements associated with acquisitions occur around the date the acquisition is announced and not when it is actually consummated, which may occur several months later. While much of the attention in acquisitions is focused on the target firms, what happens to the acquiring firm is just as interesting, if not more so.


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