Exam 7: Merger and Acquisition Strategies

___________ is often used when the acquiring firm paid too high a premium to acquire the target firm.

A major problem with buying other companies in order to gain access to their product lines is that the acquiring firm may lose its own ability to innovate.

_________ refers to a divestiture, spin-off, or some other means of eliminating businesses that are unrelated to a firm's core business.

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

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

Downscoping makes management of the firm more effective because it allows the top management team to better understand the remaining businesses.

Which of the following is NOT one of the three main restructuring strategies?

Baby Doe's, a designer and manufacturer of children's clothing, has decided to purchase a retail chain specializing in children's clothing. This purchase is a(n):

Internal product development is often viewed as:

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

Which of the following statements is FALSE?

Managers perceive internal product development as a high-risk activity and tend to choose acquisitions because approximately _______ percent of innovations are imitated within 4 years after patents are obtained.

Research suggests that emerging economy firms pay a higher premium than other firms when making cross-border acquisitions.

The outcome of downsizing, downscoping, and leveraged buyouts is higher performance.

The lower the barriers to entry, the more likely firms will use acquisition as a means to enter a market.

When a firm is overly dependent on one or more products or markets, and the intensity of rivalry in that market is intense, the firm may wish to ____ by making an acquisition.

Research has shown that maintaining a low or moderate level of firm debt is critical to the success of an acquisition, even when substantial leverage was used to finance the acquisition itself.

Firms are more likely to enter a market through acquisition when high product loyalty is present in the industry.

Research suggests that government ownership of emerging economy firms leads to overpayment in cross-border acquisitions and that overpayment reduces value for minority shareholders (nongovernment shareholders).

When a firm becomes highly diversified through acquisitions, managers often focus on financial controls rather than strategic controls.