From the target company's perspective, which of the following is a con of a strategic acquirer?

From the target company's perspective, which of the following is a con of a strategic acquirer?

• A. Faster closing timelines
• B. Synergy realization is guaranteed
• C. Alignment of incentives is always optimal
• D. Regulatory approval risk may be required and can delay or block the deal

Answer: (D)

Regulatory approval risk is a real downside for the target because deals with strategic buyers often trigger antitrust and industry-specific reviews. These processes can take a long time, introduce conditions (such as divestitures or behavioral remedies), or even block the transaction entirely. That uncertainty and potential constraint can depress the deal’s value, disrupt the company’s plans, and complicate integration. In contrast, faster closing is typically a potential upside for the target, and while synergies may be uncertain or incentives not always perfect, those are not concrete regulatory setbacks.

Regulatory approval risk is a real downside for the target because deals with strategic buyers often trigger antitrust and industry-specific reviews. These processes can take a long time, introduce conditions (such as divestitures or behavioral remedies), or even block the transaction entirely. That uncertainty and potential constraint can depress the deal’s value, disrupt the company’s plans, and complicate integration. In contrast, faster closing is typically a potential upside for the target, and while synergies may be uncertain or incentives not always perfect, those are not concrete regulatory setbacks.