When Evaluating an Acquisition You Should

question 78

Multiple Choice

When evaluating an acquisition you should:

• A)concentrate on book values and ignore market values.
• B)focus on the total cash flows of the merged firm.
• C)apply the rate of return that is relevant to the incremental cash flows.
• D)ignore any one-time acquisition fees or transaction costs.
• E)ignore any potential changes in management.

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Definitions:

Employees' Skills

The abilities and competencies that employees possess, which contribute to the performance of their job duties.

New Markets

Refers to untapped or emerging sectors or geographic areas where a business can expand its operations or sales.

Reactive Change

Change that occurs after external forces have already affected performance