Possible benefits of mergers Increased market power ex: merging may increase monopoly power, but too much may be illegal Reduction in Bankruptcy Costs ex: merger may improve financial condition of the combined firm, f reducing direct and indirect costs financial distressPossible Benefits of Mergers • Increased Market Power ex: merging may increase monopoly power, but too much may be illegal. • Reduction in Bankruptcy Costs ex: merger may improve financial condition of the combined firm, reducing direct and indirect costs of financial distress