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WHY do you think economic profit would be used in merger discussions?

WHY do you think economic profit would be used in merger discussions?

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Answer : Economic profit is the profit earned by the company after taking into an account opportunity cost. In merger discussion , economic profit plays a critical role in merger as follows:

  • Attract other companies to merge as there is a high Economic profit earned.
  • Economics of scale has been earned.
  • As there is Economic profit so there are better chances of investment in R&D taken place in it.
  • Increasing efficiency and profit of the business.
  • Higher chances of growth has been taken place.
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