A merger adds value by creating synergies.Which one of these is not a possible source of synergy?
A) Economies of scale
B) Economies of vertical integration
C) Combined complementary resources
D) Diversification

Question

Quizplus · Accepted Answer

Diversification is not a source of synergy because it involves expanding into unrelated business areas, which may not have any complementary resources or lead to economies of scale or vertical integration. As such, diversification may actually dilute the value of the merged company rather than add value through synergies.

A Merger Adds Value by Creating Synergies