1. Acquisition is the most popular means of diversifying into another industry.
2. However, finding the right company to acquire sometimes presents a challenge.
3. The big dilemma an acquisition-minded firm faces is whether to pay a premium price for a successful firm or to buy a struggling company at a bargain price.
4. The cost of entry test requires that the expected profit stream provide an attractive return on the total acquisition cost and on new capital investment needed to sustain or expand its operations.
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