how is the hurdle rate used in mergers and acquisitions 
in mergers and acquisitions the hurdle rate plays a crucial role in evaluating the potential value of the acquisition it s used as a benchmark to assess if the anticipated efficiencies and the growth prospects from the merger or acquisition justify the investment a deal is generally pursued only if the expected return is greater than the hurdle rate so that it aligns with the acquiring company s risk tolerance and return expectations can the hurdle rate vary within a company yes the hurdle rate can vary within a company based on the risk profile and the nature of different departments or projects high risk projects such as those involving new product development or expanding into new markets might have a higher hurdle rate than lower risk endeavors like routine capital maintenance varying the hurdle rate helps ensure that the rate of return keeps up with changes in the level of risk associated with each project 