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

If the acquiring firm values the target firm more than its market value as a separate entity, then the merger would create value for the acquiring firm and be financially justified. This is because the acquiring firm is able to benefit from the synergies created by combining the operations of the two firms.

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