Which of the following is NOT a reason for failure of merger and acquisions?
Answer & explanation
Correct answer: option 2
The correct answer is option (2) - High Efficiency.
High efficiency is generally a positive attribute and is not a reason for failure.
Explanation:
- High leverage: When a company takes on too much debt to finance an acquisition, it can lead to financial difficulties and eventual failure.
- Overstated synergies: When the potential cost savings or revenue increases from a merger are overestimated, it can lead to disappointment and failure to achieve desired outcomes.
- Boardroom split: Disagreement and conflict between the boards of directors of the merging companies can derail the process and lead to failure.