Consider the following two statements: (i) The more predictable cash ﬂows of acquirer and target, the easier it is to assess merger
Synergies.
(ii) Because of the merger, the synergies are equally shared between acquirer and target.
A)(i) is correct, (ii) is incorrect.
B)(ii) is correct, (i) is incorrect.
C)Both (i) and (ii) are correct.
D)Both (i) and (ii) are incorrect.
E)(ii) is only correct if acquirer and target are equally big.

Question

Quizplus · Accepted Answer

Statement (i) is correct as the ability to assess merger synergies depends on the predictability of cash flows of both the acquirer and target. Statement (ii) is incorrect because the sharing of synergies between acquirer and target depends on the negotiated terms of the merger, and may not necessarily be equal.

Consider the Following Two Statements: (I) the More Predictable Cash