The starting point in M&A is NEVER the target's pps (in a public company). It is evaluation of the underlying business, for example, revenues, earnings, pipeline etc. One simple metric to is often used is a multiple of revenues but that is NEVER used as the only means of determining purchase price. In almost all cases a DCF analysis of future cash flows is the determining factor. Once that analysis is complete, then the acquirer looks back st the other metrics and makes adjustments as necessary to get the deal done, unless those other metrics are out of whack- for example in the case of elite the P/S ratio is completely out of whack with industry averages. In the case of private companies, the primary metric used is DCF.
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