Alternative to comprehensive model is MM model, same author (Weston) are involved in both.

The
reason for including this model in the project can be viewed as a benchmark. The OM model
presents the value of the firm during a normal year under current management. The MM model
present a value that takes what the acquiring firm brings to the target under consideration. The
model is divided by two parts planning horizon and terminal value, under a planning horizon of n
year there will be a different growth rate, (super normal) and a different investment rate. The
Terminal value goes for perpetuity where the growth cannot be higher than the overall economy
growth. The theoretical value should be higher than the market value in order for synergy to be
created. The synergy is a result of cost reduction or revenue increases. The model is a useful since it
identifies the value drivers of a firm (highlights the information that is relevant for a valuation) and it
also shows the effect of new information on market value of the firm (done by a sensitivity analysis
by the different drivers). Theoretically this value should be higher than the ohlson model since it
takes under consideration what the acquiring firm brings to the target.

The model is based on the following variables

 Revenue at time zero

 k = Cost of capital (wacc)
 gs = supernormal growth
 gc = growth constant
 Is = Investment supernormal
 Ic= investment constant
 m=margin
 n = number of periods
 T=tax