Research has shown that maintaining a low or moderate level of firm debt is critical to the success of an acquisition, except when substantial leverage was used to finance the acquisition itself.

Question

Quizplus · Accepted Answer

Research indicates that the success of an acquisition can depend on various factors, including the strategic fit, integration process, and management practices, rather than solely on the level of firm debt. While high leverage can pose risks, there are instances where acquisitions financed with substantial leverage have been successful, especially if the acquired assets generate sufficient cash flow to service the debt.

Research Has Shown That Maintaining a Low or Moderate Level