ACCA Strategic Professional · Advanced Financial Management · Acquisitions and mergers versus other growth strategies
Which of the following is a recognised reason why acquisitions fail to deliver expected value?
Cultural differences and poor post-acquisition integration are recognised causes of failure because they prevent the planned synergies from being achieved, while the acquirer has already paid a premium for them.
- ACultural differences and poor post-acquisition integration erode the planned synergiesCorrect
- BPayment of a premium always guarantees synergy realisation
- CAcquiring a company in a related industry always eliminates risk
- DDue diligence is prohibited by takeover regulations
Explanation
Common causes of failure include overpayment, over-optimistic synergy estimates, cultural clash and weak integration planning. A premium does not guarantee synergies, related acquisitions still carry risk, and due diligence is not prohibited.
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