A likely reason for a larger,listed company to acquire a smaller,unlisted company is that:
A)the smaller company is undervalued.
B)smaller companies are associated with greater tax benefits.
C)the management of the smaller company may lack expertise in some areas.
D)smaller companies tend to have excess liquidity.

Question

Quizplus · Accepted Answer

A larger company may acquire a smaller company if it lacks expertise in certain areas that the smaller company can provide. This allows the larger company to expand its operations and potentially increase its profitability. The other options (undervalued, tax benefits, excess liquidity) may also be potential reasons for acquisition, but are not necessarily the most common or compelling reasons.

A Likely Reason for a Larger,listed Company to Acquire a Smaller,unlisted