Merger of two small manufacturers

September 11th, 2009, 9:48 pm

Two German manufacturers are discussing a merger. In all honesty, at the end, the bigger one (a few million dollars revenue, less than 20 employees) will acquire the smaller one (excellent but under-recognized products, multiple OEM providers, potential applicability of technology to other areas within the industry). What should they consider in this transaction? How would you price the value of the smaller firm? What factors need to be taken into consideration here?