Which of the following is a way in which the risk of failure of an acquisition can be reduced?
A) By undervaluing the assets of an acquired firm
B) By ensuring that firms are acquired in the home country
C) By replacing high-level managers of an acquired firm
D) By a detailed auditing of operations, financial position, and management culture
E) By investing only in a firm that is managing to break even

Question

Quizplus · Accepted Answer

A detailed auditing of operations, financial position, and management culture can help identify potential risks and issues in an acquisition, allowing for necessary changes and improvements to be made. This can ultimately reduce the risk of failure. Undervaluing assets, focusing only on firms that break even, or limiting acquisitions to the home country do not necessarily address potential risks and may actually increase the risk of failure. Replacing high-level managers immediately after an acquisition can also be risky as it may disrupt the acquired firm's operations and culture.

Which of the Following Is a Way in Which the Risk