Why Do Acquisitions Fail Sometimes

question 88

Multiple Choice

Why do acquisitions fail sometimes?

• A) There is a clash between the cultures of the acquiring and acquired firms.
• B) Acquisitions take a long time to execute.
• C) Acquisitions are easily preempted by making greenfield investments.
• D) The revenue and profit stream generated by an acquisition's resources is usually unknown.
• E) Losses produced by intangible assets outweigh profits from acquired tangible assets.

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Definitions:

No-Par Stock

Shares issued without a par value, which means their face value is not fixed in the stock certificate, enabling more flexibility in setting the share prices.

Stated Value

The nominal value assigned to no-par value stock by the company's board of directors, used for accounting purposes.

Legal Capital

The minimum amount of capital that a company is required to maintain as per law, to protect creditors and ensure that the company remains solvent.

Corporate Form

A legal structure of a business organization that is recognized as a separate legal entity, often characterized by limited liability for its owners and issuance of stocks.