Mergers vs Acquisitions | Synergy, Strategy & Resource Decisions | 100+ MCQs
Q1. What is one of the main reasons many mergers and acquisitions fail?
A. Lack of investor interest
B. High competition
C. Poor legal documentation
D. Lack of strategic evaluation of the best approach
Answer: D. Lack of strategic evaluation of the best approach
Q2. According to the framework, what two broad categories should companies consider when deciding on a merger or acquisition?
A. Market timing and brand power
B. Synergies and geography
C. Resources and market dynamics
D. Customer loyalty and pricing
Answer: C. Resources and market dynamics
Q3. What type of synergy involves companies working independently but sharing benefits?
A. Sequential
B. Reciprocal
C. Modular
D. Redundant
Answer: C. Modular
Q4. What is the best approach when pursuing modular synergies?
A. Full acquisition
B. Equity alliance
C. Nonequity alliance
D. Reverse takeover
Answer: C. Nonequity alliance
Q5. Which example best illustrates a modular synergy?
A. Exxon and Mobil merger
B. HP–Compaq cost-cutting
C. HP and Microsoft tech collaboration
D. NationsBank buying Montgomery Securities
Answer: C. HP and Microsoft tech collaboration
Q6. Which type of synergy requires one firm to begin a process and another to finish it?
A. Modular
B. Sequential
C. Reciprocal
D. Redundant
Answer: B. Sequential
Q7. A biotech firm developing a drug and a pharma company bringing it to market is an example of:
A. Reciprocal synergy
B. Sequential synergy
C. Modular synergy
D. Conglomerate merger
Answer: B. Sequential synergy
Q8. What’s the best collaboration model for reciprocal synergies?
A. Nonequity alliance
B. Friendly merger
C. Acquisition
D. IPO
Answer: C. Acquisition
Q9. Which merger involved reciprocal synergy and tight integration across all operations?
A. Toys R Us & Amazon
B. Exxon & Mobil
C. Heineken & FEMSA
D. Microsoft & LinkedIn
Answer: B. Exxon & Mobil
Q10. What are hard resources in an M&A context?
A. Company values and mission
B. Physical assets like plants and logistics systems
C. Brand image and goodwill
D. Employee creativity
Answer: B. Physical assets like plants and logistics systems
Q11. What’s the best strategy for combining hard resources?
A. Brand licensing
B. Acquisition
C. Sponsorship
D. IP licensing
Answer: B. Acquisition
Q12. Soft resources are best combined through:
A. Hostile takeovers
B. Nonequity partnerships
C. Equity alliances
D. Resource liquidation
Answer: C. Equity alliances
Q13. Why can acquisitions of companies with soft resources fail?
A. Too much synergy
B. Stock devaluation
C. Employee departures and cultural clashes
D. Market overvaluation
Answer: C. Employee departures and cultural clashes
Q14. The HP–Compaq merger primarily aimed at:
A. Market expansion
B. Eliminating overlapping operations
C. Acquiring patents
D. Building IP
Answer: B. Eliminating overlapping operations
Q15. What should companies do if there's low resource redundancy?
A. Go for full acquisition
B. Go public
C. Choose an alliance (equity or nonequity)
D. Create a spin-off
Answer: C. Choose an alliance (equity or nonequity)
Q16. What’s a risk of acquiring firms with strong soft assets like people and culture?
A. Overvaluation of physical assets
B. Complex supply chains
C. Employee dissatisfaction and exit
D. Logistics delays
Answer: C. Employee dissatisfaction and exit
Q17. What is a common issue in choosing between M&A strategies?
A. Ignoring market valuation
B. Treating mergers and acquisitions as the same strategy
C. Focusing only on sales
D. Only valuing tangible assets
Answer: B. Treating mergers and acquisitions as the same strategy
Q18. Which of the following fits best with an equity alliance strategy?
A. Merging factory operations
B. Outsourcing payroll
C. Collaborating on R&D involving IP and people
D. Acquiring trucks and logistics centers
Answer: C. Collaborating on R&D involving IP and people
Q19. Which resource type is most prone to loss in an acquisition?
A. Warehouse
B. Machinery
C. Intellectual capital
D. Distribution centers
Answer: C. Intellectual capital
Q20. What should a company do when pursuing modular synergies with hard assets?
A. Initiate a hostile takeover
B. Form a nonequity alliance
C. Integrate operations deeply
D. License all assets
Answer: B. Form a nonequity alliance
Q21. What’s the key success factor in collaboration capability?
A. Number of prior mergers
B. Revenue size
C. Strategic fit and timing
D. Employee age
Answer: C. Strategic fit and timing
Q22. What role does market uncertainty play in M&A decisions?
A. It's irrelevant
B. It increases the appeal of nonequity alliances
C. It limits all strategic options
D. It mandates immediate acquisition
Answer: B. It increases the appeal of nonequity alliances
Q23. What is one advantage of equity alliances over acquisitions for soft resources?
A. Strong legal control
B. Better retention of skilled employees
C. Tax advantages
D. Easy regulatory approval
Answer: B. Better retention of skilled employees
Q24. What can a strong acquisition strategy provide?
A. Brand dilution
B. Temporary valuation bump
C. Long-term competitive advantage
D. Rapid devaluation
Answer: C. Long-term competitive advantage
Q25. Which factor should companies evaluate before choosing M&A strategies?
A. Social media followers
B. Business model of competitors
C. Type of synergy and nature of resources
D. Vendor contracts only
Answer: C. Type of synergy and nature of resources
Q26. What is a core advantage of nonequity alliances?
A. High control
B. Deep integration
C. Flexibility with low commitment
D. Employee restructuring
Answer: C. Flexibility with low commitment
Q27. A merger between a logistics firm and a manufacturer with minimal integration needs would most likely benefit from:
A. Reciprocal synergy
B. Nonequity alliance
C. Hostile acquisition
D. IPO
Answer: B. Nonequity alliance
Q28. What type of alliance is best when both companies need to transfer knowledge continuously?
A. Nonequity
B. Acquisition
C. Licensing
D. Outsourcing
Answer: B. Acquisition
Q29. Why are acquisitions suited for redundant resources?
A. To promote innovation
B. To increase costs
C. To eliminate duplication and reduce expenses
D. To gain IP rights
Answer: C. To eliminate duplication and reduce expenses
Q30. What happens when companies don’t match strategy to synergy type?
A. Increased productivity
B. Failure to realize value
C. Faster integration
D. Reduced competition
Answer: B. Failure to realize value
Q31. Equity alliances offer partial ownership because:
A. It allows full control
B. It enables limited integration with shared incentives
C. It avoids market competition
D. It prevents synergy realization
Answer: B. It enables limited integration with shared incentives
Q32. One of the key differentiators between mergers and alliances is:
A. Equity structure
B. Industry type
C. Geographic proximity
D. Employee education
Answer: A. Equity structure
Q33. Which approach works best when companies need only limited coordination?
A. Equity alliance
B. Acquisition
C. Nonequity alliance
D. Merger of equals
Answer: C. Nonequity alliance
Q34. When people are the most important assets in a deal, the best approach is typically:
A. Outsourcing
B. Acquisition
C. Equity alliance
D. Automation
Answer: C. Equity alliance
Q35. Why do employees often leave after an acquisition?
A. Better salaries
B. Excitement for new opportunities
C. Loss of autonomy and cultural misfit
D. Transfer to new locations
Answer: C. Loss of autonomy and cultural misfit
Q36. In a sequential synergy model, failure in one firm’s phase affects:
A. The stock market
B. Only the supplier
C. The overall project outcome
D. Outsourced departments only
Answer: C. The overall project outcome
Q37. Which type of synergy requires minimal knowledge sharing and coordination?
A. Modular
B. Sequential
C. Reciprocal
D. Functional
Answer: A. Modular
Q38. What kind of merger works best for deep knowledge exchange?
A. Nonequity alliance
B. Reciprocal synergy-driven acquisition
C. Strategic sponsorship
D. Brand licensing
Answer: B. Reciprocal synergy-driven acquisition
Q39. Market dynamics such as uncertainty and competition should influence:
A. Hiring strategy
B. The timing of IPOs
C. The choice between alliances and acquisitions
D. Office location
Answer: C. The choice between alliances and acquisitions
Q40. If two companies bring unique, but tightly integrated capabilities, they should choose:
A. Nonequity alliance
B. Equity alliance
C. Acquisition
D. Licensing agreement
Answer: C. Acquisition
Q41. When is an acquisition less risky?
A. When assets are intangible
B. When synergies are modular
C. When hard assets and clear redundancy exist
D. When companies are in unrelated markets
Answer: C. When hard assets and clear redundancy exist
Q42. If both firms operate independently and merge results at the end, what synergy type is this?
A. Sequential
B. Modular
C. Reciprocal
D. Linear
Answer: B. Modular
Q43. Equity alliances are most effective when companies need:
A. Speedy exit
B. Deep legal control
C. Moderate integration and shared ownership
D. Strong outsourcing channels
Answer: C. Moderate integration and shared ownership
Q44. If there is no need for asset combination or tight coordination, which is preferred?
A. Nonequity alliance
B. Acquisition
C. Joint venture
D. IPO
Answer: A. Nonequity alliance
Q45. Why might a firm avoid acquisition when targeting soft assets?
A. It's legally restricted
B. It’s expensive
C. Acquisitions often destroy soft asset value
D. It's unpopular with investors
Answer: C. Acquisitions often destroy soft asset value
Q46. When companies have little redundancy and wish to remain flexible, they should opt for:
A. Acquisition
B. Nonequity alliance
C. Complete merger
D. Corporate divestiture
Answer: B. Nonequity alliance
Q47. Which collaboration type fits when the market is highly uncertain?
A. Acquisition
B. Horizontal merger
C. Nonequity alliance
D. Internal R&D
Answer: C. Nonequity alliance
Q48. What is a key characteristic of reciprocal synergy?
A. No integration required
B. Parallel execution
C. Continuous collaboration and shared learning
D. Zero risk
Answer: C. Continuous collaboration and shared learning
Q49. Soft resources are challenging in M&A because:
A. They depreciate rapidly
B. They are intangible and tied to people and culture
C. They have limited market value
D. They are taxed higher
Answer: B. They are intangible and tied to people and culture
Q50. What is a major risk when failing to match collaboration type to resource type?
A. Rising share price
B. Overperformance
C. Poor value creation and execution failure
D. Enhanced innovation
Answer: C. Poor value creation and execution failure
Q51. What framework helps determine the best M&A strategy?
A. Market size and share
B. Resource types and synergy goals
C. Customer feedback scores
D. CEO tenure and board structure
Answer: B. Resource types and synergy goals
Q52. Which type of synergy is best suited for airline–hotel loyalty programs?
A. Sequential
B. Reciprocal
C. Modular
D. Redundant
Answer: C. Modular
Q53. What is one downside of equity alliances?
A. No ownership rights
B. Complete loss of control
C. Shared control with limited flexibility
D. Legal invalidity
Answer: C. Shared control with limited flexibility
Q54. What type of synergy is present when companies take over stages of each other’s processes?
A. Modular
B. Sequential
C. Linear
D. Reciprocal
Answer: B. Sequential
Q55. What typically happens when companies acquire each other for soft assets but ignore cultural fit?
A. Synergy realization is accelerated
B. Brand value multiplies
C. Deal fails to deliver value
D. Regulatory approval becomes easier
Answer: C. Deal fails to deliver value
Q56. What type of merger did Toys R Us and Amazon represent?
A. Reciprocal synergy
B. Equity alliance
C. Sequential synergy
D. Hostile acquisition
Answer: C. Sequential synergy
Q57. A major cause of failed acquisitions targeting people and IP is:
A. Operational delays
B. Retention issues and cultural misalignment
C. Low synergy potential
D. Branding problems
Answer: B. Retention issues and cultural misalignment
Q58. When both companies share responsibility across the full value chain, it implies:
A. Modular synergy
B. Sequential synergy
C. Reciprocal synergy
D. Redundant synergy
Answer: C. Reciprocal synergy
Q59. Why are hard resources easier to acquire than soft resources?
A. They are intangible
B. They require little due diligence
C. They are easy to value and integrate
D. They depreciate slowly
Answer: C. They are easy to value and integrate
Q60. When a company seeks reciprocal synergies and control, the ideal structure is:
A. Licensing agreement
B. Strategic sourcing
C. Full acquisition
D. Sponsorship
Answer: C. Full acquisition
Q61. Equity alliances reduce integration risk by:
A. Completely avoiding ownership
B. Allowing shared stakes while preserving autonomy
C. Limiting resource access
D. Eliminating the need for synergy
Answer: B. Allowing shared stakes while preserving autonomy
Q62. Companies should avoid acquisition if:
A. Redundant resources exist
B. Modular synergies are the goal
C. Cultural alignment is perfect
D. Employee buy-in is high
Answer: B. Modular synergies are the goal
Q63. What defines soft resources in M&A strategy?
A. Inventory and distribution centers
B. Product catalog
C. People, brand, and knowledge
D. Physical infrastructure
Answer: C. People, brand, and knowledge
Q64. A nonequity alliance allows for:
A. Majority ownership
B. Legal merging
C. Collaboration without ownership
D. Employee consolidation
Answer: C. Collaboration without ownership
Q65. Companies that aim to avoid cultural disruption should avoid:
A. Nonequity alliances
B. Joint marketing campaigns
C. Full acquisitions of people-centric firms
D. Outsourcing deals
Answer: C. Full acquisitions of people-centric firms
Q66. What is the key feature of a reciprocal synergy?
A. Simple handoff
B. Close collaboration and mutual dependency
C. Legal independence
D. No coordination required
Answer: B. Close collaboration and mutual dependency
Q67. Which strategy aligns best with uncertain or volatile markets?
A. Acquisition
B. IPO
C. Nonequity alliance
D. Brand licensing
Answer: C. Nonequity alliance
Q68. An example of poor fit between resource type and deal structure is:
A. Buying a data analytics firm to retain employees
B. Merging factories for cost-cutting
C. Partnering with a brand for modular marketing
D. Acquiring a culture-heavy creative agency
Answer: D. Acquiring a culture-heavy creative agency
Q69. When companies expect long-term interdependence, they should choose:
A. Sponsorship
B. Reciprocal synergy through acquisition
C. Loose partnerships
D. Licensing deals
Answer: B. Reciprocal synergy through acquisition
Q70. Strategic M&A decision-making improves when companies:
A. Prioritize brand names only
B. Focus solely on ROI
C. Align synergy goals with deal structures
D. Outsource the integration process
Answer: C. Align synergy goals with deal structures
Q71. The success of HP–Compaq was largely dependent on:
A. Brand visibility
B. Retaining employees
C. Eliminating overlapping operations
D. Regulatory lobbying
Answer: C. Eliminating overlapping operations
Q72. A company wanting autonomy and limited financial entanglement should use:
A. Equity merger
B. Nonequity alliance
C. Reverse acquisition
D. Takeover bid
Answer: B. Nonequity alliance
Q73. Why is collaboration capability a key strategic asset?
A. It helps reduce product prices
B. It increases board salaries
C. It improves success in alliances and acquisitions
D. It reduces need for legal oversight
Answer: C. It improves success in alliances and acquisitions
Q74. What kind of alliance provides a test run before full acquisition?
A. Hostile bid
B. Nonequity alliance
C. IPO
D. Joint venture or equity partnership
Answer: D. Joint venture or equity partnership
Q75. Which M&A path is preferred when time-to-market is critical and resources are redundant?
A. Nonequity alliance
B. Internal development
C. Acquisition
D. Crowdfunding
Answer: C. Acquisition
Q76. In choosing an M&A strategy, which factor is least important?
A. Type of synergy
B. Nature of resources
C. Industry trends
D. CEO personal preference
Answer: D. CEO personal preference
Q77. What distinguishes equity alliances from nonequity alliances?
A. Level of taxation
B. Shared ownership interest
C. Brand equity
D. Market penetration
Answer: B. Shared ownership interest
Q78. A nonequity alliance is most effective when:
A. There is a need for tight integration
B. Employees must be retained
C. Operations remain mostly independent
D. Brand control is crucial
Answer: C. Operations remain mostly independent
Q79. Which type of synergy needs a strict legal agreement to ensure execution between stages?
A. Modular
B. Sequential
C. Redundant
D. Reciprocal
Answer: B. Sequential
Q80. Cultural integration is most difficult in which type of M&A strategy?
A. Nonequity alliance
B. Acquisition involving soft assets
C. Strategic sponsorship
D. Licensing
Answer: B. Acquisition involving soft assets
Q81. A strategy that promotes high flexibility and low financial risk is:
A. Hostile takeover
B. Equity acquisition
C. Nonequity alliance
D. Share swap
Answer: C. Nonequity alliance
Q82. Which of the following deals would most benefit from a reciprocal synergy approach?
A. A factory and a warehouse integration
B. A tech firm and a cloud service combining R&D
C. Two unrelated brands sharing advertising
D. Logistics company buying a truck fleet
Answer: B. A tech firm and a cloud service combining R&D
Q83. What is a risk of entering a full acquisition without synergy consideration?
A. Reduced market share
B. Lost opportunity for equity
C. Misalignment of goals and wasted investment
D. Higher valuation
Answer: C. Misalignment of goals and wasted investment
Q84. Which structure is best when knowledge sharing is essential to success?
A. Joint venture or acquisition
B. Non-compete clause
C. Outsourcing
D. Debt financing
Answer: A. Joint venture or acquisition
Q85. When companies pursue market access without owning each other, they usually form:
A. Nonequity alliance
B. Vertical merger
C. Reverse IPO
D. Bankruptcy alliance
Answer: A. Nonequity alliance
Q86. An M&A decision becomes a competitive advantage when:
A. It boosts short-term stock prices
B. It’s driven by board preference
C. It's carefully aligned with synergy and resource type
D. It follows a rival's path
Answer: C. It's carefully aligned with synergy and resource type
Q87. What usually happens when cultural misalignment occurs post-acquisition?
A. Smooth onboarding
B. Increased synergy
C. High attrition and value loss
D. Enhanced creativity
Answer: C. High attrition and value loss
Q88. Which type of synergy is easiest to separate from daily operations?
A. Sequential
B. Reciprocal
C. Modular
D. Tangible
Answer: C. Modular
Q89. Which approach is most suitable for combining manufacturing capacity and logistics chains?
A. Nonequity alliance
B. Equity alliance
C. Full acquisition
D. Brand partnership
Answer: C. Full acquisition
Q90. A company that lacks experience in collaboration should:
A. Immediately acquire its partner
B. Outsource M&A entirely
C. Build capability through lower-risk alliances
D. Focus only on modular deals
Answer: C. Build capability through lower-risk alliances
Q91. When the synergy goal is short-term co-marketing, the best approach is:
A. Acquisition
B. Nonequity alliance
C. Joint venture
D. Reverse merger
Answer: B. Nonequity alliance
Q92. What resource consideration makes equity alliances preferable?
A. High redundancy
B. Tangible asset control
C. Dependence on skilled talent and culture
D. Legal risk
Answer: C. Dependence on skilled talent and culture
Q93. In a fast-changing industry, what advantage do alliances provide?
A. Reduced market competition
B. Fixed ROI
C. Flexibility and speed to adapt
D. Regulatory control
Answer: C. Flexibility and speed to adapt
Q94. In acquisition deals, the most difficult part to evaluate is usually:
A. Patents
B. Machines
C. Culture and people-related soft assets
D. Customer list
Answer: C. Culture and people-related soft assets
Q95. A merger that avoids deep operational changes aims to preserve:
A. Branding
B. Modular synergy
C. Control
D. Legal flexibility
Answer: B. Modular synergy
Q96. A reciprocal synergy alliance should only be pursued if both firms:
A. Have equal assets
B. Can operate autonomously
C. Are willing to share knowledge and processes openly
D. Share office space
Answer: C. Are willing to share knowledge and processes openly
Q97. Redundant resources in two merging firms typically result in:
A. Asset underperformance
B. Increased costs
C. Cost reduction through consolidation
D. Revenue loss
Answer: C. Cost reduction through consolidation
Q98. When M&A aims for innovation via R&D collaboration, the structure should support:
A. Silent integration
B. Independent marketing
C. Shared knowledge and equity
D. Brand ownership transfer
Answer: C. Shared knowledge and equity
Q99. What is a sign that an acquisition strategy may fail?
A. Full employee retention
B. Clear cultural integration plan
C. Ignoring synergy potential
D. Aligned incentives
Answer: C. Ignoring synergy potential
Q100. What’s the best strategy for a firm wanting to keep IP protection and limited control?
A. Full acquisition
B. Nonequity alliance
C. Equity alliance with agreements
D. Brand transfer
Answer: C. Equity alliance with agreements
Q101. Which option is most suitable for combining hard, valuable assets and eliminating overlap?
A. Acquisition
B. Equity partnership
C. Marketing alliance
D. Licensing deal
Answer: A. Acquisition
