Strategy Test 3 chapter 10
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Corporate level strategy should create what?
such that the value of the corporate whole increases
such that businesses forming the corporate whole are worth more than they would be under independent ownership
that equity holders cannot create through portfolio investing
Difference between a merger and an acquisition?
merger are generally view as more amicable, less threatening
What is A tender offer?
offer made to stockholders to buy their shares of stock
What is a merger?
two firms are combined on a relatively co-equal basis
What is an acquisition?
one firm buys another firm
What about M&A activity?
M&A activity on average creates value, but target firms generally capture it
Why do managers continue to acquire and merge?
- Free Cash Flow
- Agency Problems- the managers benefit
- Managerial Hubris- believe they can beat the odds
What do high levels of integration require?
greater cultural blending
Least liked of mergers and acquisitions?
Post-merger or acquisition integration is the less “sexy” part of the transaction and therefore it is an under-research area and is often poorly done.
A and M executive turnover?
- greater the turnover of executives in an acquired firm, the lower the post-acquisition
- firm performance.
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