A strategic buyer is most interested in the stand-alone, cash-generating potential of a business.Group of answer choicesTrueFalse

Understanding the Statement

1. Break Down the Problem: The statement asserts that a strategic buyer prioritizes the stand-alone, cash-generating potential of a business.

2. Relevant Concepts:

   • A strategic buyer typically seeks synergies from the acquisition, meaning they are interested in how the business will complement or enhance their existing operations.
   • Stand-alone cash-generating potential refers to the ability of the business to operate independently and generate profits without assistance or integration with other operations.

3. Analysis:

   • If a buyer focuses solely on the stand-alone cash-generating ability, they might be more aligned with a financial buyer, who is primarily interested in the investment's return.
   • Strategic buyers usually consider how an acquisition will fit into their overall strategy, including factors like market share, competitive advantage, and operational synergies.

4. Verify and Summarize: The statement seems to misinterpret the primary interests of strategic buyers. They are not merely focused on the cash-generating potential in isolation. Instead, they look at how the acquisition aligns with and enhances their existing business operations.

Final Answer

False: A strategic buyer is generally more interested in the potential synergies and strategic fit of an acquisition rather than just its stand-alone cash-generating potential.