Exam 9: Diversifying, Acquiring, and Restructuring

Although the term mergers and acquisitions M&As) is often used, in reality, acquisitions dominate the scene.

Other comments you saw in the blog are less hostile to business. In one, the person was claiming that recent developments in financial markets suggest that it is time to revive the use of conglomerates. Based on what is happening now, do you agree? Why or why not?

The following managerial motives for conglomerations do not benefit shareholders except: a. Norms. b. Reducing managers' employment risk. c. Organizational stability. d. Pursuing power, prestige, and income. e. Empire building.

Operational synergy involves economies of scale.

Which of the following is true regarding M&As? a. As many as 70 percent of M&As reportedly fail. b. On average, the acquiring firms' performance improves after acquisitions. c. Target firms, after being acquired and becoming internal units, often perform better than when they were independent, stand-alone firms. d. The only identifiable losers are the shareholders of target acquired) firms. e. The outstanding success of M&As is due to pre- and post acquisition phases.