The shareholders of a target firm benefit the most when:
A) An acquiring firm has the better management team and replaces the target firm's managers.
B) The management of the target firm is more efficient than the management of the acquiring firm which replaces them.
C) The management of both the acquiring firm and the target firm are as similar as possible.
D) The current management team is kept in place even though the managers of the acquiring firm are more suited to manage the target firm's situation.
E) The management team is technologically knowledgeable yet ineffective.

Question

Quizplus · Accepted Answer

When an acquiring firm with a superior management team replaces the management of the target firm, it often leads to improved efficiency, strategic direction, and operational execution. This can significantly enhance the target firm's performance and, consequently, increase shareholder value.

The Shareholders of a Target Firm Benefit the Most When