A successful merger requires that the:
A) P/E ratio maintains its pre-merger value.
B) Debt-equity ratio of the ﬁrm remains at its pre-merger level.
C) Book value per share must remain constant.
D) Book value per share must increase.
E) Value of the whole exceeds the value of the sum of the parts.

Question

Quizplus · Accepted Answer

A successful merger requires that the value of the merged company is greater than the sum of the individual companies. This means that the merged company should have improved financial performance, increased market share, and potential cost savings. Therefore, the value of the whole must exceed the value of the sum of the parts for the merger to be successful. The other options do not necessarily determine the success of a merger.

A Successful Merger Requires That The