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Finance & Accounting
Pages 3 (753 words)
Finance and Accounting: Exam Questions Your Name Instructors Name Course Name Due Date 1. What are the primary differences between operating and financial synergy? Give examples to illustrate your statements. Essentially Synergy refers to the combination of any two things that are more valuable as a combined entity rather than “the sum of their parts.” Financial Synergy occurs when the holding company cannot raise capitol as quickly or as inexpensively as they can within their subsidiaries, which is, overall, easier and cheaper to raise capital.
This results in a reduction per unit output and an increase in their average rate of operation. Such mergers can be extremely beneficial to companies who can benefit from the future advantage of multiple manufacturers are supported by a singular center. This can prove to be quite cost effective in the long term. 2. What are the advantages and disadvantages of the friendly versus hostile approaches to a corporate takeover? Hostile takeovers are sometimes preferred because it allows the takeover firm to, essentially, ambush the target company, giving them no time to react, preempt, or interfere with such a takeover. It forces the hands of the target company giving them little beneficial choice in attempting to impede the takeover. Friendly takeovers are only really beneficial when the takeover company wants to maintain much of the staff and management and prevent any interference in productivity. A friendly takeover comes with a warning and can encourage more cooperation; however that is not always the case. ...
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