Which one of these is the best justification for acquiring a firm?
A)Increasing the bidder firm's sphere of political influence
B)Managing a larger firm to justify higher management salaries
C)Desire to control more employees
D)Creating financial value by combining the bidder and target firms
E)Creating accounting goodwill

Question

Quizplus · Accepted Answer

The best justification for acquiring a firm is to create financial value by combining the strengths and resources of the bidder and target firms. This can lead to increased market share, economies of scale, higher revenues, and cost savings, resulting in overall financial growth and benefits for the bidder firm's stakeholders. Acquiring a firm solely for political influence or to control more employees may not result in long-term success, and creating accounting goodwill may not necessarily translate into tangible benefits. Managing a larger firm to justify higher salaries is not a valid justification for acquisition.

Which One of These Is the Best Justification for Acquiring