The merger of the two companies with computer software rapidly growing non-overlapping products makes great strategic sense, but is difficult valuation and accounting principles problems. How can a company pay $ 225 million to acquire another company with negligible current earnings, and the time for an immediate $ 150 MM charge to earnings, which will be followed over a period of five years from $ 65 million amortization of intangibles produce promises?

The merger of the two companies with computer software rapidly growing non-overlapping products makes great strategic sense, but is difficult valuation and accounting principles problems. How can a company pay $ 225 million to acquire another company with negligible current earnings, and the time for an immediate $ 150 MM charge to earnings, which will be followed over a period of five years from $ 65 million amortization of intangibles produce promises?
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William E. Fruhan
Source: Harvard Business School
16 pages.
Publication Date: Aug 30, 1994. Prod #: 295 028 PDF-ENG
Intuit, Inc. HBR case solution