Academics and practitioners have identified several major reasons that drive firms’ merger, acquisition, and breakup decisions. Correctly identify the term or motive for the merger and acquisition with its description. Description Term or Motive for Merger
AcquireYou Corp. bought AcquireMe Inc., which
has assets with a value considerably lower than
its market value.
If two firms merged, the value of the new company
would exceed the current pre-merger values of the
individual firms.
Mpisal Inc.’s managers have kept a target of growing
the company by 20% by acquiring smaller firms. They
believe that they can earn higher salaries if the company
is bigger.
Cendant, a huge conglomerate built through several
mergers, decided to create four separate companies—
Century 21, Avis, Days Inn, and Orbitz—because the
managers felt that they would create more value for
shareholders as individual companies.