Vertical integration can increase firm value only if a merger provides gains from ________ and cost savings.
A)synergies
B)debt repayments
C)equity swaps
D)shareholders
E)bondholders

Question

Quizplus · Accepted Answer

Synergies refer to the benefits that result from combining the resources and capabilities of two companies. These can include cost savings, enhanced operational efficiency, increased market power, and improved product offerings. Vertical integration, which involves the integration of different levels of the supply chain, can create synergies that result in increased firm value. Therefore, A is the best choice as B, C, D, and E are not relevant to the concept of vertical integration.

Vertical Integration Can Increase Firm Value Only If a Merger