Regarding motives for acquisitions, synergistic motives add value while hubris and managerial motives reduce value.

Question

Quizplus · Accepted Answer

Synergistic motives involve combining resources and capabilities to create value that is greater than what each company could achieve on its own. This can lead to cost savings, improved efficiencies, and increased market share. On the other hand, hubris and managerial motives often involve overpaying for a target company, pursuing vanity projects, or attempting to boost the acquirer's ego or CEO's compensation. These motives can reduce shareholder value and weaken the financial health of the acquiring firm. Synergistic motives refer to the benefits that can be achieved by combining the resources and capabilities of the acquiring and target companies, leading to increased value. On the other hand, hubris and managerial motives such as overconfidence, desire for power, and personal gain are often associated with poorly performing acquisitions that reduce value.

Regarding Motives for Acquisitions, Synergistic Motives Add Value While Hubris