14. Which of the following is not a direct source of value in a merger?a. Tax synergyb. Better investment policyc. Diversification synergyd. Growth synergy
Question
14. Which of the following is not a direct source of value in a merger?
a. Tax synergy
b. Better investment policy
c. Diversification synergy
d. Growth synergy
Solution
The option that is not a direct source of value in a merger is b. Better investment policy.
Here's why:
a. Tax synergy: This is a direct source of value in a merger because the combined company may be able to take advantage of a more favorable tax rate or other tax benefits.
b. Better investment policy: While a better investment policy can certainly add value to a company, it is not a direct result of a merger. It's something that can be improved upon regardless of a merger.
c. Diversification synergy: This is a direct source of value in a merger because the combined company can benefit from a more diverse product or service offering, which can lead to increased revenue.
d. Growth synergy: This is a direct source of value in a merger because the combined company can potentially achieve faster growth through increased market share, cost savings, and other efficiencies.
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