Managing Acquisitions of Strategic Business Units with the Aid of the Arbitrage Pricing Model

Abstract

The Arbitrage Pricing Model (APM), developed in the securities investment literature, can enhance corporate managers' insights into the economic sensitivities of potential acquisition candidates. It may provide managers with greater analytical power than such popular models as the G. E. Business Screen and the Boston Consulting Group model. Use of the APM should improve the effectiveness of the acquisition screening process.