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CIMAPRA19-F03-1 Exam - Topic 7 Question 19 Discussion

Posted by Elly on May 07, 2022 at 11:19 PM

Company M is a listed company in a highly technical service industry.

The directors are considering making a cash offer for the shares in Company Q, an unquoted company in the same industry.

Relevant data about Company Q:

* The company has seen consistent growth in earnings each year since it was founded 10 years ago.

* It has relatively few non-current assets.

* Many of the employees are leading experts in their field. A recent exercise suggested that the value of the company's human capital exceeded the value of its tangible assets.

The directors and major shareholders of Company Q have indicated willingness to sell the company.

Before negotiations become too advanced, the directors of Company M are considering the benefits to their company that would follow the acquisition.

Which THREE of the following are the most likely benefits of the acquisition to Company M's shareholders?

Suggested Answer: A, D, E

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8 comments · newest first
LA
Lauran 12 months ago
Wait, how can human capital be worth more than assets?
AZ
Azalee 1 year ago
Diversification could really help reduce risk!
WI
Willodean 1 year ago
Not so sure about improved EPS right away.
NO
Norah 1 year ago
Definitely agree on economies of scale.
WI
Wilda 1 year ago
Access to technical expertise is a big win!
CA
Carey 1 year ago
Hmm, I'm a bit confused on the difference between the classic information security model and the Five Pillars model. I'll need to review those before answering.
KI
King 1 year ago
This seems like a straightforward question about common visual monitoring technologies. I'll carefully read through the options and think about which one is most commonly used.
HI
Hillary 1 year ago
I think one of the advantages is definitely the ability to make changes to the code. That was emphasized in a lot of our study materials.
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