Acquisition Premium
What Does Acquisition Premium Mean?
The difference between the actual cost for acquiring a target firm versus the estimate made of its value before the acquisition.
Investopedia explains Acquisition Premium
During a merger and acquisition, companies will first estimate the cost that they wish to pay for a target firm. As the entire M&A process takes many weeks, the price paid for the target firm may in fact be higher or lower than its market price at the time of completion because of economic fluctuations.
