Question

Your firm is considering acquiring a smaller company. The products and markets fit well within your organization’s strategy. This potential acquisition is a high-tech company that is presently losing money. Some in your organization argue that the acquisition is not a good idea since the high-tech company is losing money and this will cause your firm’s return on equity to decrease.

• Are the naysayers correct? Will your ROE decrease? Why?
• How important are changes in ROE when considering an acquisition?

Answer 1

Pg wo-o Slot Jolution - In this Specific case at the Small Company is Being acquired by a larger Company → The aligneement of the Somaller Companies procet in the market directly detect with the larger company's Structure directly merge with larger Companies → it would deferebly Increase thie overall avaliability of thie markel Smalley. Companies and provide better Support to the overall structure of Smaller Companies, and acquisition of the Company would be to tally depending on markel. Stiligy of products totally aligned with larger Companies structure ₃. company lossing money at the starting state input gain. in the largest Company & merging would definitely make a Stable change in Betten ' acquisition of money. From the Same market -

Pg No- → As Smaller Company as Comparatively very small relative fiances as compared to the larger Company In this Specific Situation the Return on Equity would definitely. decreases a little in the starting phase of the acquisition But efter Very short period Sensing changes in Return of equity are very Essentia the Company mergeing Dollhez Company: = proper understanding of d return on Equity definitely provides a better Support for financial Management pares a pork for Sucess for the organization acquisition. oul lui -