Spring, an American firm, recently acquired another company, Tazel Inc

QUESTION

Spring, an American firm, recently acquired another company, Tazel Inc., in Indonesia. The high-level managers at Tazel quit because they could not cope with the domineering and straightforward approach of their American counterparts.

This illustrates how acquisitions may fail because:

A. managers overestimate their ability to create value from an acquisition.

B. integration of operations between the two firms takes longer than forecasted.

C. there is a clash between the cultures of the acquired and the acquiring firm.

D. an acquiring firm overpays for the assets of an acquired firm.

E. inadequate pre-acquisition screening has been done.

ANSWER

C