Exam 21: Mergers, Acquisitions, and Corporate Control

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The free-cash-flow theory supports the notion that the market gain from an LBO is basically the present value of the firm's future cash flows that were kept from being wasted.

(True/False)

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Question 41

Mergers may provide reductions in average production cost as a result of:

(Multiple Choice)

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Question 42

Who are typically the primary beneficiaries in a merger?

(Essay)

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Question 43

When one firm merges with another, the:

(Multiple Choice)

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Question 44

Energetic Inc., believes that it can acquire Satisfied Industries and improve efficiency to the extent that the market value of Satisfied will increase by $5 million. Satisfied currently sells for $20 a share, and there are 1 million shares outstanding. a. Satisfied's management is willing to accept a cash offer of $25 a share. Can the merger be accomplished on a friendly basis? b. What will happen if Satisfied's management holds out for an offer of $28 a share?

(Essay)

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Question 45

Large-scale efforts to make a firm less appealing in the midst of a potential merger are known as:

(Multiple Choice)

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Question 46

Leveraged buyouts are acquisitions where a large fraction of the purchase price is financed with debt.

(True/False)

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Question 47

Which one of the following statements is correct concerning the cost of two firms merging? The cost:

(Multiple Choice)

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Question 48

Which one of the following statements is correct for a firm that has undergone a leveraged buyout?

(Multiple Choice)

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Question 49

Firm B's 1 million shares of stock currently sell for $12 each, but firm A is preparing a tender offer of $18 per share. Firm A estimates the gain of the merger to be $5 million. What percentage of the merger gains will be captured by firm B's stockholders?

(Multiple Choice)

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Question 50

If Snapper Lawnmowers were to acquire Briggs and Stratton (gasoline-powered engines), the merger would be classified as a:

(Multiple Choice)

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Question 51

Strictly speaking, the purchase of the stock or assets of another firm is an acquisition.

(True/False)

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Question 52

Which one of the following is correct concerning a spin-off?

(Multiple Choice)

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Question 53

Vertical integration makes sense when two firms are highly dependent upon each other.

(True/False)

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Question 54

A merger is expected to produce cost savings of $50 million and the acquired firm's shareholders will receive a premium of 20% over the $150 million value of their firm. The gain of the merger to the acquirer is:

(Multiple Choice)

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Question 55

Changing management is the only reason that firms make acquisitions.

(True/False)

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Question 56

When an outside group acquires a firm, primarily through the use of borrowed funds, the acquisition is known as a:

(Multiple Choice)

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Question 57

One of the reasons why proxy fights are rarely successful is that:

(Multiple Choice)

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Question 58

Mergers that attempt to bootstrap earnings may obtain increased current earnings per share at the expense of:

(Multiple Choice)

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Question 59

What does empirical evidence suggest about the distribution of gains from mergers?

(Multiple Choice)

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Question 60

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Exam 21: Mergers, Acquisitions, and Corporate Control

The free-cash-flow theory supports the notion that the market gain from an LBO is basically the present value of the firm's future cash flows that were kept from being wasted.

Mergers may provide reductions in average production cost as a result of:

Who are typically the primary beneficiaries in a merger?

When one firm merges with another, the:

Large-scale efforts to make a firm less appealing in the midst of a potential merger are known as:

Leveraged buyouts are acquisitions where a large fraction of the purchase price is financed with debt.

Which one of the following statements is correct concerning the cost of two firms merging? The cost:

Which one of the following statements is correct for a firm that has undergone a leveraged buyout?

Firm B's 1 million shares of stock currently sell for $12 each, but firm A is preparing a tender offer of $18 per share. Firm A estimates the gain of the merger to be $5 million. What percentage of the merger gains will be captured by firm B's stockholders?

If Snapper Lawnmowers were to acquire Briggs and Stratton (gasoline-powered engines), the merger would be classified as a:

Strictly speaking, the purchase of the stock or assets of another firm is an acquisition.

Which one of the following is correct concerning a spin-off?

Vertical integration makes sense when two firms are highly dependent upon each other.

A merger is expected to produce cost savings of $50 million and the acquired firm's shareholders will receive a premium of 20% over the $150 million value of their firm. The gain of the merger to the acquirer is:

Changing management is the only reason that firms make acquisitions.

When an outside group acquires a firm, primarily through the use of borrowed funds, the acquisition is known as a:

One of the reasons why proxy fights are rarely successful is that:

Mergers that attempt to bootstrap earnings may obtain increased current earnings per share at the expense of:

What does empirical evidence suggest about the distribution of gains from mergers?

Goals and Governance of the Corporation

Financial Markets and Institutions

Accounting and Finance

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash-Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing

How Corporations Raise Venture Capital and Issue Securities

Debt Policy

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Working Capital Management

International Financial Management

Options

Risk Management

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