The following are sensible motives for mergers:
I.prevent target firm from wasting surplus funds;
II.eliminate target firm inefficiencies;
III.complementary resources;
IV.increasing earnings per share (EPS)
A)I only
B)I and II only
C)I, II, and III only
D)IV only

Question

Quizplus · Accepted Answer

I) Preventing target firm from wasting surplus funds is a sensible motive for mergers as it maximizes shareholder value.
II) Eliminating target firm inefficiencies can lead to cost savings and increase efficiency in the merged entity, which can be beneficial for shareholders.
III) Complementary resources can be beneficial for the merged entity, as it can help increase market share and provide synergies.
IV) Increasing earnings per share (EPS) may not always be a sensible motive for mergers, as the focus should be on long-term sustainable growth, rather than short-term gains.

The Following Are Sensible Motives for Mergers