Why will someone pay a higher price than the book value to buy a company?


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Why will someone pay a higher price than the book value to buy a company?

4 Answer(s)


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you pay extra for the Brand , Good will , the existing customers in the company etc .

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Book value is historical value does not reflect today's actual value.
Extra for intangible assets like brand name, talented management etc..

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the share price will always the discount the future. where as the the book value is the purchase price of the asset. it is expalined as market value and book value.

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book value is historical value. whereas market value reflects current value. current value could be high because of so many reasons, like goodwill of company, future prospect of company, competitive advantage of company etc.