Question

Which of the following is one of the reasons why acquisitions fail?

	a.	The synergies of the two firms happens quickly and neither acquired nor acquiring firm are prepared for full integration.
	b.	Despite adequate pre-acquisition screening, the entities encounter unexpected governmental involvement.
	c.	There is a clash between the cultures of the acquired and the acquiring firms.
	d.	The acquired firm often overpays for the assets of the acquiring firm

Answer 1

Option C.

• Acquisitions refers to the act of acquiring all the assets or a company as a whole.
• It helps the existing firms in expanding their business and also allows them to weaken the effect of their competitors.
• One of the main disadvantage of acquisitions is that, it sometimes leads to a clash between the culttues of the acquired and the acquiring firm's.
• This leads to a failed integration of operations between the acquiring and the acquired firms.