Chapter 15

Question 1

This postulated that top managers typically overestimate their ability to create value from an acquisition, primarily because riding to the top of a corporation has given them an exaggerated sense of their own capabilities

Answer 1

The hubris hypothesis

Question 2

This postulated that management of the acquiring firm is often too optimistic about the value that can be created via an acquisition and is thus willing to pay a significant premium over a target firm’s market capitalization

Answer 2

The hubris hypothesis

Question 3

Cross licensing

Answer 3

One is licensing technology and the other is licensing something else back from them

Question 4

One foreign company combines with a local company, not merging but just working together on one specific project that needs this diverse set of skills

Answer 4

Joint venture