What is a merger?

• One company lends money to another

• Two companies join to form a new company

• A company buys only the assets of another

• A company closes down another one

What is an acquisition?

• Selling a company to another

• Merging companies equally

• One company takes control of another

• Forming a new business

What is meant by "synergy" in a merger?

• Losing customers after a deal

• The combined companies are weaker together

• Combined companies create more value than separate

• Reducing profits for tax savings

A common reason for merging is:

• Decreasing market power

• Increasing competition

• Increasing market share

• Increasing costs

What is "economies of scale"?

• Smaller companies are more efficient

• Costs increase faster than production

• Costs grow slower than output

• Only large companies are profitable

What can happen to staff after a merger or acquisition?

• No changes at all

• Guaranteed promotions

• Possible redundancies

• Only pay increases

Why might a company buy another with surplus cash?

• To lose money on purpose

• To give bonuses to staff

• To invest extra money for growth

• To avoid new product launches

What is a risk of paying too much in an acquisition?

• Too many job applications

• Shareholder value may decrease

• Customers will leave

• Lower taxes

What does "asset stripping" mean?

• Investing in new factories

• Selling off valuable parts of a company

• Giving bonuses to new staff

• Paying less for a company

A benefit of using shares instead of cash in a deal is:

• Faster payment

• No need to raise cash

• Tax is always lower

• Full control is kept by old owners