Which statement best describes mergers?
A)The acquiring firm's required rate of return in most horizontal mergers will not be affected, because the two firms will have similar betas.
B)Financial theory says that the choice of how to pay for a merger is irrelevant because although it may affect the firm's capital structure, it will not affect its overall required rate of return.
C)The basic rationale for any consolidation is financial synergy and, thus, the estimation of pro forma cash flows is the single most important part of the analysis.
D)The primary rationale for most operating mergers is synergy.

Question

Quizplus · Accepted Answer

Synergy is the primary rationale for most operating mergers, as it can lead to increased efficiency and value creation.

Which Statement Best Describes Mergers