1. Dr Dragan Milovanovic, Faculty of Economics University of Banja Luka, Republic of Srpska, Bosnia and Herzegovina

With the increasing globalization of world markets and the internationalization activities of large corporations, occurrence of acquisitions and their mutual mergers have become common practice in all markets. Numerous research studies deal with the problems of evaluating mergers and acquisitions transactions, as well as analyzing the advantages and disadvantages of mergers and acquisitions. For the past two years, almost did not have more global company that has not been able to implement a strategy or taking recourse to a defensive mechanism in the event that the target acquisition. In economic theory and practice, taking over a company by another company, called the acquisition. On the other hand, mergers are the activities of the merger of two companies into a new entity that starts an independent business. When the acquisition of the target company must pay it\'s fair market value or higher cost, added value can be created solely on the basis of a synergistic effect or effective management. Synergistic effect is present when the value of the combined company after the M&A is worth more than the sum of individual companies before the M&A transactions. Income from a synergistic effect can be achieved by increasing the cash flow or by reducing the cost of capital. Management firm that plans to merge with another company must first assess whether the investment is profitable for them. In this sense, they must assess how companies target actually worth. Naturally, both sides of this work have different views about the value of the company that \"target\". Seller intends to evaluate the company as expensive as possible, while the buyer will try to lower the maximum price possible. Among the numerous methods for evaluating the company, will use the method of discounted cash flow (DCF). Budget obtained value target companies may be a more reliable indicator. In case of successful completion of mergers and acquisitions, the company will not acquire the only provider of value target companies, but also the value of other benefits from combining. The aim of this study was to quantify the value benefits of mergers and acquisitions as a form of company restructuring. The aim of this article is also to be based on the practical interpretation of mergers and acquisitions of two companies, to elaborate options for improving the effects of operating and financial synergies. The article used the scientific method of deduction, analysis and comparative analysis of best practices. Interpretation of results should serve as a basis for professional and scientific discussion on the valuation of mergers and acquisitions (M&A) as a form of company restructuring.

Key words: Mergers; acquisitions; synergy; enterprise restructuring; the DCF method

Conference: REDETE 2011

Date: 18.05.2011.