Monday, February 15, 2010 2:43:41 AM
Look at it this way -- what if $10 million in cash was acquired for $1 million in stock? I know the example is unlikely, but it`s simple to illustrate my point. Especially in reverse merger types of deals you acquire the assets on the books.
I could be wrong on all this, but I believe the term is "negative goodwill" -- this link should help:
http://www.investopedia.com/terms/n/negativegoodwill.asp
Think of it like buying a foreclosure property on the cheap. You get something illiquid that has a high value but no liquid market (or I'm sure the media credits would be cashed out instead of used).
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