Which of the following point is not consistent with the decision of undertaking a merger and acquisition? Select one: a. Reducing operational synergies b. Capturing tax benefits c. Taking advantage of economies of scale d. Improving target management
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- Several reasons have been proposed to justify mergers. Among the more prominent are (1) tax consideration, (2) risk reduction, (3) control, (4) purchase of assets at below replacement cost, and (5) synergy in general. Which of the reasons are economically justifiable? Which are not? Which fit the situation at hand? Explain.Q9. Which of the following are generally not considered motives for mergers? Desire to achieve antitrust regulatory approval Desire to achieve economies of scale Desire to achieve economies of scope Strategic realignment Desire to purchase undervalued assetThe following are sensible motives for mergers EXCEPT: a. Economies of scope b. Reducing firm risk through diversification c. Reducing competition d. Eliminating inefficiencies e. All of the above
- Find a recent merger transaction that failed due to regulatory concerns over market share concentration and reduction of consumer alternatives. Do you support the regulatory concerns? Explain briefly the transaction and your reasoning.Which of the following LEAST accurately describes the advantages of specific types of mergers and acquisitions?a. The catch-all term for the benefits from M&As is synergy.b. A diversified group of business may further acquire other businesses in a conglomerate type of acquisition.c. The acquisition of an entity outside the industry and supporting services will result to decrease in cost of production of the acquirer.d. Financial advantages of M&A include decreased operating costs, increased financial capacity, and combined sales.If you are planning an acquisition that is motivated by trying to acquire expertise, you are basically seeking to gain intellectual capital. What concerns would you have in structuring the deal and the post-merger integration that would be different from the concerns you would have when buying physical capital?
- a) What is a conglomerate merger and why are they more likely to be approved? b) Limit pricing is a strategy where a firm sets a low, but profitable, price to discourage entry. How does that differ from predatory pricing? c) What is "Share the gain, share the pain" theory?Why might two companies choose to form a strategicalliance rather than pursue a merger or an acquisition?Which is not a valid, acceptable reason for companies to merge? Synergistic benefits arising from mergers. Reduction in competition resulting from mergers. Acquisition of assets at below replacement value. Attempts to minimize taxes by acquiring a firm with large accumulated losses that can be used immediately. Using surplus cash to acquire another firm and prevent unfavorable tax consequences for shareholders.
- What is a controlling financial interest? How did the FASB define this in FIN 46(R)? What are typical difficulties in ascertaining whether control exists where perhaps no voting interest is actually maintained? Please choose a recent business combination and address what you feel their motives were for the combination. Do you see any problems with their decision to combine?60 When the entity uses the IFRS for SMEs, investments in jointly controlled entities must be tested for impairment, if the entity uses Group of answer choices The cost method, the equity method or the fair value model The cost model or the fair value model The equity method or the cost model The equity method or the fair value model“Reasons for merger that will result in wealth maximization are strategic benefits, market power, economics of scale, economies of vertical integration and taxation benefits”. Describe how any four out of the five factors mentioned may contribute to the success of a merger business exercise
