In your judgment, are acquirers more likely to under or overestimate anticipated cost savings? Why?

Expert Solution

Acquirers will generally be over estimating the cost savings because when they will be trying to enter into acquisition with the target company, they will always be trying to overestimate the benefits associated with the acquisition of the target company and there will be a overvaluation of the cost benefit which will be ascertained with various intermediaries in relation to acquisition of a target company.

Anticipated Synergy will be often overestimated as tangible Synergy due to cost saving from eliminating duplicate overhead facilities is most easily measured and it is likely to represent the greatest source of value to be realised from combining two firms and cost savings from acquisition of of target company will be overstated because the acquirer company wants to buy this target company badly enough and management will always be able to justify a higher buying price for its own company so acquirer will always try to overestimate the cost savings associated with an acquisition

jeff jeffy answered 1 year ago

Under a typical accountability system, why are schools with multiple racial and economic subgroups more likely...

Under a typical accountability system, why are schools with multiple racial and economic subgroups more likely to face sanctions? Why are smaller schools more likely to face sanctions?

When your Cost of borrowing exceeds your rate of return you are more likely to gain...

When your Cost of borrowing exceeds your rate of return you are more likely to gain an advantage in most situations related to borrowing capital True False

Cost savings are likely to be greatest when firms with dissimilar operations are merged or consolidated....

Cost savings are likely to be greatest when firms with dissimilar operations are merged or consolidated. True or False

"Canadian firms rely more on subjective judgment than on formal models when computing the cost of...

"Canadian firms rely more on subjective judgment than on formal models when computing the cost of equity capital." what do you think.

In today's economic environment, is the cost of capital for an MNE likely to be more...

In today's economic environment, is the cost of capital for an MNE likely to be more or less expensive than the cost of capital for a domestic firm? Explain.

why a patient with gout is more likely to develop renal calculi.

who are ultimate savers and borrowers? Why are savers more likely to save more when the...

who are ultimate savers and borrowers? Why are savers more likely to save more when the interest rate is high. What are the three types of demand for money by households and why is that important for investment purposes?

For osteoporosis, since women are more likely to develop osteoporosis more than men. Why is this...

For osteoporosis, since women are more likely to develop osteoporosis more than men. Why is this the case? What are possible reasons that women are more likely to develop osteoporosis and what are the causes?

In your opinion, why is it important to exercise due diligence and sound professional judgment when...

In your opinion, why is it important to exercise due diligence and sound professional judgment when accepting new audit clientele? Do you feel it is appropriate to contact predecessor auditors to gather information about a potential new client? Why or why not?

What are the management-entrenchment and the shareholders'-interests hypotheses? Which seems more realistic in your judgment? Explain...

What are the management-entrenchment and the shareholders'-interests hypotheses? Which seems more realistic in your judgment? Explain your answer.

Question