Only if a target firm's value is greater to the acquiring firm than its market value as a separate entity will a merger be financially justified.

Question

Quizplus · Accepted Answer

A merger only makes financial sense if the value of the target firm exceeds its market value as a separate entity. If the market value of the target firm is greater or equal to its value to the acquiring firm, then a merger will not create value for the acquiring firm.

Only If a Target Firm's Value Is Greater to the Acquiring