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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

  1. Which of the following is not a direct source of value in a merger?a. Tax synergyb. Better investment policyc. Diversification synergyd. Growth synergy
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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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