The value of firm B to firm A is equal to the value of:
A) Firm B as a stand-alone firm plus the synergy value.
B) The incremental benefit of the merger or acquisition.
C) The incremental cash flows from the merger or acquisition.
D) The incremental cash flows minus the value of firm B as a stand-alone firm.
E) The firm AB plus the incremental gain.

Question

Quizplus · Accepted Answer

The value of firm B to firm A includes the value of firm B as a stand-alone entity plus any additional value (synergy) that arises from the merger or acquisition, which can result from cost savings, increased market power, or other factors.

The Value of Firm B to Firm a Is Equal