What is a disadvantage of a merger model?

The correct choice highlights a potential limitation inherent in a merger model: it often fails to adequately account for synergies and transaction costs. This is significant because a merger model is typically used to forecast the financial implications of merging two companies, and understanding synergies (the potential financial benefits that can arise from combining operations) is crucial for evaluating the overall value of a merger.

Transaction costs can include expenses such as advisory fees, legal costs, and integration costs that could affect the net benefit of a merger. If these elements are overlooked or not fully integrated into the financial projections, the analysis may lead to an overly optimistic view of the merger's outcomes, providing stakeholders with a misleading picture. Therefore, recognizing that traditional merger models might not incorporate these factors comprehensively is vital for making informed decisions regarding mergers and acquisitions.

The other options present different aspects that, while potentially relevant in certain contexts, don't directly capture this critical shortcoming of merger models, thus making the understanding of synergies and transaction costs a central consideration in their application.