Merger and Acquisition

Question 1

Advantages of merger/acquisition [5]

Answer 1

• To gain Synergies (revenue, cost, financial)
• To reduce/eliminate competition in market
• To reduce/eliminate supply chain threats
• Remove entity barriers
• Rapid and Speedy Growth

Question 2

Disadvantages of acquisition [5]

Answer 2

1. Growth might not be in line with stated objectives of the parent
2. Riskier as its immediate and needs proactive approach
3. Acquisition premium (vs mv/share)
4. Integration process is timely and costly
5. Pressure on mgmt to learn and manage new business