Ann: Delivers Strong Growth and Record First Half, page-8

re: Ann: Delivers Strong Growth and Record Fi... chubbito - this is common misconception that is absolutely not true. I'm sure you can google the truth, but here's a quick summary.

High growth company with ebtida multiple of 10, buys lower growth company on ebitda of 5. Both have editda of $10 million.

Before transaction companies were worth $100 million and $50 million. According to your logic the acquirer will now be worth $200 million, i.e. $20 million ebitda times multiple of 10.

The reality is companies trade at different multiples for reasons and money is not magically made during a transaction. The company will be worth $150 million, as it is a blend of the two companies.

Occasionally there will be some real synergy benefits that will create value, but that occurs rarely, way less than any investment banker or company executive would have you believe.