Exam 7: Merger and Acquisition Strategies

Currently, the rationale for making an acquisition includes all of the following EXCEPT to:

A leveraged buyout refers to a(n):

Most acquisitions that are designed to achieve greater market power entail buying a competitor, a supplier, a distributor, or a business in a highly related industry.

Researchers have found that shareholders of acquired firms often:

Traditionally, leveraged buyouts were used as a restructuring strategy to correct for managerial mistakes or because the firm's managers were making decisions that primarily served their own interests rather than those of shareholders.

One problem with becoming too large is that large firms:

When the actual results of an acquisition strategy fall short of the projected results, firms consider using restructuring strategies.

In terms of results, one attribute of a successful acquisition is that a firm with strong complementaries is acquired and overpayment is avoided.

Horizontal acquisitions and related acquisitions tend to contribute less to a firm's competitiveness than do unrelated acquisitions.

Whole-firm LBOs tend to result in all the following negative outcomes EXCEPT:

Internal product development is often viewed as:

The intent of the owners in a whole-firm leveraged buyout may be to increase the efficiency of the bought-out firm and resell it in five to eight years.This tends to make the managers of the bought-out firm high risk takers, since they will probably not survive the resale and thus have little to lose.

Moon-in-June, a designer and manufacturer of wedding dresses, has decided to purchase a retail chain specializing in bridal wear.This purchase will be useful in gaining more market power for Moon-in-June.

TableTop Industries just went through a restructuring and is experiencing reduced labor costs.It is most likely that TableTop just completed what?

The presence of barriers to entry in a particular market will generally make acquisitions __________ as an entry strategy.

Junk bonds are now used more frequently to finance acquisitions primarily because of the belief that debt disciplines managers.

A horizontal acquisition involves two firms in the same industry.

The expenses incurred by firms trying to create synergy through acquisition are called __________ costs.

A leveraged buyout will often result in a short-term outcome of __________, which, in turn, leads to a long-term outcome of __________.

Royalware, based in New England, wanted to establish a foothold in the Midwest, so it made an unsolicited bid to purchase TrueBlue, a similar firm based in Indiana.This is an example of a takeover.