The Cost of a Merger May Outweigh the Potential Gain

question 39

Multiple Choice

The cost of a merger may outweigh the potential gain if the:

• A) present value of the acquired firm exceeds the price paid for it.
• B) present value of the merged firms is greater than the sum of their individual values.
• C) merger allows cost savings to occur.
• D) acquired firm's shareholders receive more than the value of their firm.

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Definitions:

Subsystems

Subsystems are smaller components of a larger system.

Operations and Service Management

The administration of business practices aimed at ensuring maximum efficiency within a company, specifically in the production of goods and services.

Trade Associations

Organizations founded and funded by businesses operating in a specific industry, aimed at promoting common interests, sharing information, and often influencing public policy.

Competitive Advantage

The ability of a company or business to perform in a way that allows it to outperform its competitors.