hard · Investment Banking valuation-core

If the buyer's share price drops by 10% before the deal closes, what happens to the value received by the target's shareholders?

1. The buyer must pay the 10% difference in cash as a 'top-up' payment.
2. The exchange ratio increases automatically to compensate for the price drop.
3. The value received by the target shareholders decreases by 10%.
4. The value remains the same because the exchange ratio is fixed.

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