Josuel Reynoso
FIN 4930
Fri 6:05PM 9:00P
Josuel Reynoso
Chapter 1 Assignment
Q1.1. Discuss why mergers and acquisitions occur.
There are many reasons why mergers and acquisitions occur which fall under two main categories. The first
one is operating synergy and the other is financial synergy.
Under Operating Synergies, we have:
Economies of scale – Each unit it cheaper to buy and faster to make with its new facilities in place
Economies of scope – Charter now has a big opportunity by saving on Network/Content costs and bringing
costs from other expenses down now that it is a bigger company.
And for the financial synergies, mergers and acquisitions occur from the need of diversification;
Technological/political change; purchasing undervalued assets; replacement of managers due to
