Which of the following does NOT correctly complete this sentence: If cash is used to finance an acquisition, then _____________________.
A) the shareholders of the acquiring firm will be better off than if stock were used regardless of whether or not the acquisition is a success in terms of value
B) the cost of the acquisition will not depend on the acquisition gains
C) the selling firm's shareholders will not fully participate in the gains of the merger
D) the transaction is usually taxable
E) control of the acquiring firm will not be affected

Question

Quizplus · Accepted Answer

The statement in choice A is incorrect because whether shareholders of the acquiring firm are better off using cash versus stock depends on various factors, including the relative valuation of the firms, the success of the acquisition, and tax considerations. It is not accurate to say they will always be better off using cash regardless of the acquisition's success.

Which of the Following Does NOT Correctly Complete This Sentence