The discounted cash flow dcf approach can be applied

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The discounted cash flow (DCF) approach can be applied to estimate the stand-alone value of a target company during a business combination - Expected FCF that will be generated by target must be estimated and discounted over lifetime to estimate transaction value - Discount rate for valuation purposes should reflect risk of target company. (WACC could be used) - Various factors like financial and operational synergies can influence valuation inputs - Changes in control of target company could have an effect on value, the influences of the changes should be incorporated during the valuation process. - Various other valuations approaches are less complex and could be employed, however less sophisticated and thus will have less accurate results. 13 | P a g e
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