Human Capital during Acquisition -The consideration and valuation of human capital in knowledge-based companies

University essay from Göteborgs universitet/Företagsekonomiska institutionen

Abstract: Purpose:Thepurposeofthisthesisistoenhancetheunderstandingofwhetherhumancapitalisconsideredandvaluedduringacquisitionsofknowledge-­‐basedcompaniesand,ifitistakenintoaccount,howitisconsideredandhowthevaluationisperformed.Thepurposeisfurthertoinvestigatewhyhumancapitalisvaluedinthiswayandhowanacquisitionisaffectedbytakinghumancapitalintoconsideration.Method:Toachievethepurposeofthisthesis,datawascollectedthroughqualitative,semi-­‐structuralinterviewswiththefourlargestauditfirms,Deloitte,PwC,Ernst&YoungandKPMG.Therespondentsareexpertsoncompanyvaluationwithagreatexperiencefromacquisitionsandonerespondentisanexpertonhumanresourcesduediligence.Theapproachofthisthesisisdescriptiveandaimstodescribethecurrentconditionwithintheresearcharea.Result:Thisthesisconcludesthathumancapitalisvaluedindirectlyasapartofthetotalcompanyvaluation.Thevaluationisperformedusingdiscountedcashflows(DCF)andthemarketapproachsimultaneously.Thevaluationincludesseveralassessmentsmadebytheappraiserandthusthevalueofthecompanyincludessubjectivity.Thevaluationofaknowledge-­‐basedcompanyisnotperformeddifferentlythanavaluationofothersortsofcompaniesbuttherearespecificrisksthatneedtobeestimated.Possibleexplanationsastowhythesevaluationapproachesareusedcouldbefoundinfunctionalfixation,institutionaltheoryandnormativeisomorphism.Humancapitalisfurtherconsideredduringtheintegrationprocess.Theintegrationisimportantinordertoachieveallexpectedsynergiesandthusmaketheacquisitionsuccessful.Contribution:Thisthesisisvaluableforstakeholdersinordertoinvestinaknowledge-­‐basedcompanysincetherequiredinformationtodeterminetherisksofthecompanyisoftennotavailable.Further,thethesisisofvalueforpotentialinvestorsinordertoenhancetheunderstandingofthedifficultyofseeinghumancapitalasanassetandwhattokeepinmindwhenacquiringaknowledge-­‐basedcompany.Thethesisisfurthervaluableforallpeopleseekingtoenhancetheirunderstandingofhowthevaluationofhumancapitalisperformedduringacquisitions.

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