Which of the following represent potential gains from an acquisition?
I.the replacement of ineffective managers
II.lower costs per unit produced
III.an increase in firm size so that diseconomies of scale are realized
IV.spreading of overhead costs
A)II and III only
B)I and IV only
C)I, II, and IV only
D)I, III, and IV only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

Replacement of ineffective managers can lead to better performance and profitability of the acquired firm, resulting in increased overall value post-acquisition. Lower costs per unit produced can be achieved through economies of scale, which can also lead to an increase in firm size and an opportunity to spread overhead costs. Therefore, options I, II, and IV are all potential gains from an acquisition. Option III is not a potential gain as it suggests that the acquisition would result in diseconomies of scale, which would not benefit the firm.

Which of the Following Represent Potential Gains from an Acquisition