The size of the target firm is the best predictor of the likelihood of being taken over by another firm.

Question

Quizplus · Accepted Answer

Studies have shown that the size of the target firm is positively correlated with the likelihood of being acquired by another firm. Larger firms have more resources, capabilities, and market power, which make them attractive targets for strategic acquisitions. Smaller firms, on the other hand, are less likely to be targeted because they may not have the same level of assets or market position that would benefit the acquirer. However, there are many other factors that can influence takeover activity, including industry dynamics, economic conditions, and competitive pressures.

The Size of the Target Firm Is the Best Predictor