Studies Reveal That Over One-Half to Two-Thirds of Acquisitions Are

question 106

Multiple Choice

Studies reveal that over one-half to two-thirds of acquisitions are failures primarily because

• A) the premiums paid were too high for the firm to earn their cost of capital.
• B) due diligence was not conducted.
• C) the premiums were too high to finance and resulted in bankruptcy.
• D) there were unresolved management conflicts.
• E) there was a clash of management philosophies.

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Definitions:

Average Tax Rate

The proportion of total income that a taxpayer pays in taxes, calculated by dividing the total taxes paid by the total taxable income.

Taxable Income

The amount of income that is used to calculate how much tax an individual or a company owes to the government.

GAAP

Generally Accepted Accounting Principles, a common set of accounting rules and standards used in financial reporting.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, essential for assessing financial health.