Which of the following statements concerning mergers and acquisitions is true? I. Mergers of firms of...

Which of the following statements concerning mergers and acquisitions is true? I. Mergers of firms of equal size usually have better outcomes than mergers of firms of different sizes II. Acquisitions of small private firms usually result in better outcomes than acquisitions of public firms III. Growth-based mergers are usually less successful than cost-based mergers Select one: a. I only b. I and II only c. I and III only d. II and III only e. I, II, and III

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Expert Solution

statement 1 is correct that mergers of firms with equal size have better outcomes, this statement would have been wrong if it would have been for acquisitions.

Statement 2 is quite subjective, we cant' actually generaize it. It depends on which industrial domain the aquisition has been planned for. For private firms information availability is an issue and that also for small private firms while for public firms information is readily available. So in same sector its ok to go for private firms over public, but for a new business its better to go with public firms. So I think this statement is correct but not very sure for this.

Statement 3 is incorrect as well as grwoth based mergers prove their value in little long term rather cost based mergers are more of a short term kind of. So I think if we are talking of something being successful we should talk of long term rather than short.

So option (b) should be correct.

jeff jeffy answered 1 year ago

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