Question

5. The primary reason managers give for most mergers is to acquire more assets so as to increase sales and market share. a. True b. False ANSWER: False

PLEASE EXPLAIN WHY???

WHAT IS THE TRUE REASON MANAGERS GIVE FOR MOST MERGERS?

Answer 1

answer: False.

TRUE REASON MANAGERS GIVE FOR MOST MERGERS is because they can increase their perks, salary and influence.

It's better to be a chief executive officer of a big company making the same amount of profit rather than a small company.

Example:
The TATA Group has made a large scale acquisition over the past two decades prominent among these is the acquisition of Corus by Tata Steel, Jaguar Landrover by Tata motors.

The Acquisition well done at a very high valuation. Such high valuation was justified on the grounds of potential synergy.

Post facto such synergy has not been realised and the TATA Group stocks have underperformed broader markets.

Most merger and acquisition a design with a view to becoming big rather than beautiful (synergy/profit/increased sales). Such bigness obviously benefits the C level position (CFO, CEO, COO etc) but it hurts shareholders value.