The positive incremental net gain associated with the combination of two firms through a merger or acquisition is called:
A)the agency conflict.
B)goodwill.
C)the merger cost.
D)the consolidation effect.
E)synergy.

Question

Quizplus · Accepted Answer

Synergy refers to the positive incremental net gain that comes from combining two firms through a merger or acquisition. This gain can come from a variety of sources, including cost savings, increased market power, and enhanced revenues. Goodwill is a related concept but specifically refers to the intangible asset value that a company acquires when it purchases another company for more than the fair market value of its assets. The other answer choices do not accurately describe the positive incremental net gain associated with a merger or acquisition.

The Positive Incremental Net Gain Associated with the Combination of Two