Which of the following statements concerning acquisitions are correct?
I. Being acquired by another firm is an effective method of replacing senior management.
II. The net present value of an acquisition should have no bearing on whether or not the acquisition occurs.
III. Acquisitions are often relatively complex from an accounting and tax point of view.
IV. The value of a strategic fit is easy to estimate using discounted cash flow analysis.
A) I and III only
B) II and IV only
C) I and IV only
D) I, III, and IV only
E) I, II, III, and IV

Question

Quizplus · Accepted Answer

Statement I is correct in the sense that senior management of the acquired firm may be replaced by the acquiring firm's management. Statement III is correct as acquisitions often involve complex financial and legal processes. Statement II is incorrect as the net present value of an acquisition is a key factor in determining whether or not to proceed with the acquisition. Statement IV is also incorrect as the value of a strategic fit is difficult to estimate and involves numerous intangible factors that are not easily quantifiable.

Which of the Following Statements Concerning Acquisitions Are Correct