Question

In a pure financial merger, which of the following benefits is expected?

Management efficiency

Economies of scale

Operating economies

All of the above

None of the above

Answer 1

None of the above.

When the operations of the two firms getting merged are very different,the proposed merger is known as "purely financial merger". The resulting company is faced with the same competition in each of its two markets after the merger as the individual firms were before the merger.Considering this fact it may be concluded that a pure financial merger can be benefitted by a much more stable cash flow instead of having any impact on Management efficiency,Economies of scale and Operating economies.