Question

Which of the following is not a reason for merger and acquisition failures? a. The acquiring company pays a large premium for the common stock of the target company. b. Top executives act in their best interests rather than those of the shareholders. c. The acquisition leads to value creation. d. The acquired company assets are poorly integrated into the acquiring company business lines.

Answer 1

c. The acquisition leads to value creation

Step-by-step explanation:

Mergers and acquisitions are acts that lead to two companies consolidating their assets. Merging aims to stimulate growth, increase market share, or to gain competitive advantage.

If successful, merging improves the prospects of a company. Through merging, the acquiring company gains more capital and market share. The value of the company appreciates. Mergers and acquisitions enhance the chances of the company to succeed.