A proposed acquisition may create synergy by doing all the following except:
A)increasing the market power of the combined firm.
B)improving the distribution network of the acquiring firm.
C)reducing the acquiring firm's distribution costs.
D)reducing the utilization of the acquiring firm's assets.
E)providing the combined firm with a strategic advantage.

Question

Quizplus · Accepted Answer

Synergy is a concept in which the value of a combined firm is greater than the sum of the individual firms. One way this can be achieved is through the acquisition of a target firm that complements the acquiring firm's strengths. Increasing market power, improving distribution network, reducing distribution costs, and providing a strategic advantage are all potential sources of synergy. However, reducing the utilization of the acquiring firm's assets would not create synergy but would instead result in inefficiency.

A Proposed Acquisition May Create Synergy by Doing All the Following