ACCA AFM September 2026: The 9-Mark Acquisition Gain — Why Most Candidates Only Calculate One

The requirement said "with and without the expected synergies". That is two numbers. The examiner reported that a significant number of candidates handed in one. Half the calculation marks in a 9-mark requirement, gone before the marker reached the arithmetic.

AFM passed 47% in June 2026. The Sep/Dec 2025 examiner's report on Halstock Co sets out exactly where the acquisition gain question falls apart — and none of it is difficult. It is reading.

What the examiner actually found

Requirement (a) of Halstock Co was worth 9 marks: calculate the percentage gain in Halstock Co's shares with and without the expected revenue and cost synergies. The examiner lists the errors in order, and the last one on the list is the most expensive: "Only calculating one gain, which was often the gain without adding any synergies."

Second on the list, and just as costly: candidates deducted the wrong value for the target. Marnhall's owner said he would accept $160m. The estimated market value was $145.8m. The $160m is what Halstock pays, so $160m is what comes off. The examiner notes many candidates used $145.8m — which inflates the gain by the entire acquisition premium and makes a bad deal look good.

Third: the debt/equity split. The DCF gives you the value of the whole combined company. You are asked for the gain to shareholders. With a 15:85 debt/equity ratio, 85% of that combined value is equity. Candidates who skipped that step compared an entity value against two equity values and got nonsense.

Fourth: the perpetuity. The question stated all variables after year 4 remain the same as year 4. Candidates put growth into the model anyway, then failed to discount the year 5 onwards perpetuity back using the year 4 factor. The examiner has now flagged "not acknowledging details provided in the question" in consecutive reports.

Worked example

Take Halstock's figures. Offer to Marnhall $160m. Marnhall's market value $145.8m. PV of after-tax synergies $18.6m. Halstock's own value $210m. Debt/equity 15:85. Say your DCF gives a combined entity value of $460m.

Wrong answer — one gain, market value deducted, no equity adjustment:

$460m + $18.6m − $145.8m − $210m = $122.8m, a 58.5% gain. Enormous, and wrong three times over.

Correct answer — two gains, offer price deducted, equity adjusted:

Combined equity = $460m × 0.85 = $391m.

With synergies: $391m + $18.6m − $160m − $210m = $39.6m. As a percentage of Halstock's $210m: 18.9%.

Without synergies: $391m − $160m − $210m = $21m, or 10.0%.

Those two numbers are the answer. They also hand you part (b) for free: the deal only works if the $18.6m of synergies is real, and nearly half the gain depends on it. That is your scepticism mark, and you got it from the calculation you were already doing.

What to do

1. Underline every number in the scenario before you start, then account for each one. The examiner's error list is almost entirely figures that were in the question and were ignored — $160m, the 15:85 split, "all variables after year 4 remain the same". Nothing there needed knowledge.

2. Build the gain as a fixed sequence and never improvise it. Combined entity value → × equity proportion → add synergies → deduct the price paid for the target → deduct the acquirer's own pre-deal value → divide by the acquirer's pre-deal value. Same five steps every time.

3. Count the answers the verb demands. "With and without" is two. "As a percentage" means a percentage, not an absolute — the examiner listed candidates who stopped at the $ figure. Read the requirement again after you finish and tick off each deliverable.

The bottom line

AFM's 47% sits mid-table in the June 2026 Options — above APM at 42% and AAA at 39%. The examiner was clear that the technical work was often fine: "a good number of candidates gained full marks for the present value of the cash flows from years 1 to 4." They then lost the marks on the four lines that turn a valuation into an answer.

You are not failing AFM on the discounting. You are failing it on the last five lines of the schedule.