Unformatted text preview: ebt can:
– Increase the likelihood of bankruptcy
– Lead to a downgrade of the firm’s credit rating
– Preclude investment in activities that contribute to the
firm’s long-term success such as:
• Research and development
• Human resource training
• Marketing 1–22 Problems in Achieving Acquisition Success: Inability to Achieve Synergy
– When assets are worth more when used in
conjunction with each other than when they are used
• Firms experience transaction costs when they use
acquisition strategies to create synergy.
• Firms tend to underestimate indirect costs when
evaluating a potential acquisition.
• Private synergy: combining assets yields
capabilities and core competences
1–23 Problems in Achieving Acquisition Success: Too Much Diversification
• Diversified firms must process more information
of greater diversity.
View Full Document
- Spring '12
- Firm, Achieving Acquisition Success