Exam 7: Merger and Acquisition Strategies

Hostile acquisitions provide greater financial returns to the acquiring company as it is easier for managers to integrate the firms.

After a leveraged buyout, __________ typically occur(s).

__________ may be necessary because acquisitions create a situation in which the newly formed firm has excess capacity in organizational functions such as sales, manufacturing, distribution, and human resource management.

The factors that lead to poor long-term performance by acquisitions include all of the following EXCEPT firms:

Horizontal, vertical, and related acquisitions to build market power:

The post-acquisition integration phase is less important for acquisition success than characteristics of the deal itself.

One of the potential problems associated with acquisitions is that the additional costs required to manage the larger firm will exceed the benefits of the economies of scale and additional market power.

__________ are unsecured obligations that are not tied to specific assets for collateral.

Company experiences show that participation in and overseeing the activities required for making acquisitions can divert managerial attention from other matters that are necessary for long-term competitive success.

Research has shown that the more different the acquired firm is in terms of competencies and resources than the acquiring firm, the more likely the acquisition is to be successful.

When substantial debt is used to finance acquisitions, firms with successful acquisitions:

Typical returns on acquisitions for the shareholders of the acquiring firms are close to zero.

Entering new markets through acquisitions of companies with new products is not risk-free, especially if acquisition becomes a substitute for:

In the final analysis, firms use merger and acquisition strategies to improve their ability to create value for all stakeholders, including stockholders.

Cross-border acquisitions are primarily made to:

Which of the following is a reason to pursue an acquisition?

Acquisitions can take a lot of time for top level managers for all the following reasons EXCEPT:

The use of high levels of debt in acquisitions has contributed to:

Research has shown that the more __________, the greater is the probability that an acquisition will be successful.

Junk bonds are a financing option through which risky acquisitions are financed with debt that provides a large potential return to bondholders.