The best rationale for a merger is that the value of the firms combined is:
A)at least equal to the sum of their separate values.
B)greater than the sum of their separate values.
C)less than the sum of their separate values.
D)None of the above

Question

Quizplus · Accepted Answer

The best rationale for a merger is that the value of the firms combined is greater than the sum of their separate values. Otherwise, there would be no financial incentive for the firms to merge. The merger should create synergies that increase efficiency, reduce costs, or expand markets, which in turn should increase the combined firm's value beyond what each firm might achieve on its own.

The Best Rationale for a Merger Is That the Value