What happens in the takeover market when a company performs poorly?

Question

BlackTom AI · Accepted Answer

When evaluating how the takeover market behaves for a poorly performing company, it helps to consider the incentives and mechanisms at play.
Option a: 'The company hires more employees.' This describes internal organizational actions rather than a market response to underperformance. Hiring more staff would typically occur in an attempt to improve operations, not as a direct consequence of being a takeover target.
Option b: 'Corporate raiders may acquire the company at a discount.' This reflects a common takeover dynamic: distressed or underperforming firms can be attractive to raiders who seek to buy them for less than their intrinsic value, often restructuring or selling assets for a gain. The discount arises from perceived risk, distressed cash flows, or the need for quick capital, making the firm a potential acquisition target at favorable terms for buyers.
Option c: 'The company increases its profits.' While improved profitability is a goal, it is not a direct explanation of what happens in the takeover market when a company performs poorly. The market reaction is more about buyers’ interest and pricing, not an immediate internal profit spike.
Option d: 'The company expands its market.' Similar to option c, expansion is an internal strategic move and not a direct outcome of takeover market dynamics in response to weak performance. If anything, expansion plans might be reevaluated under takeover pressure.
In summary, option b best captures the typical takeover-market response to underperformance, where financially stressed firms can be acquired at a discount by corporate raiders seeking value or restructuring opportunities, whereas the other options describe internal actions or outcomes that are not the characteristic market reaction to poor performance.

My home Progress Check

What happens in the takeover market when a company performs poorly?

查看解析

登录即可查看完整答案

类似问题

In the context of M&A, which of the following statements is correct?

Which of the following statements is CORRECT?

Which of the following best explains why M&A activity tends to cluster in waves:

Which of the following is true about motivations for takeovers?

A conglomerate merger between two unrelated firms is most likely to create value when:

According to the Australian Financial Review, 2015 was called as _________________ because China Investment Corporation won $2.45 billion investment office portfolio.

Which of the following is an important factor driving the decision on whether the firm uses cash or stocks to acquire another value enhancing firm?

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单