Page 1 of 20
M&A EXAM STUDY GUIDE EXAM LATEST UPDATE
2024\2025 QUESTIONS AND CORRECT ANSWERS|
GRADED A+
Why did the merger of Bank of America and Nations Bank occur? - Ans: this deal
created the first coast to coast banking company
- this deal will bring in more customers because it creates convenience when
traveling from coast to coast (less fees etc.)
when did the bank merger between Bank of America and Nations Bank occur? and
why? - Ans: 1998
- in 1994, federal law was passed that you could operate across any state as a bank
- thus, this deregulation made it now legal which increased the likelihood of
success
- this was due to political and economic conditions
What makes a deal likely to pass antitrust laws? - Ans: If the merger is productive
and convenient for the customer, the better.
When will a merger have issues with antitrust laws? - Ans: If the merger is
designed to increase prices and decrease competition
Why might technology have had an impact on the Bank of America and
NationsBank Deal? - Ans: ATMs were readily available at this time.
Information in NationsBank - Ans: -NCNB stands for North Carolina Nations
Banks
- CEO: Hugh McCoe
- Headquartered in Charlotte
How was Bank of America initially formed in 1998? - Ans: Nations Bank acquired
BankAmerica, and was then named Bank of America to operate across states
What was Bank of America's founded as? - Ans: Bank of Italy by Amadeo Gianini.
Where was BankAmerica headquartered and NationsBank headquartered before
and after their merger? - Ans: -BankAmerica was headquartered in San Fransisco
before the merger
-NationsBank was headquartered in Charlotte before the merger.
,Page 2 of 20
After: they became Bank of America and headquartered themselves in Charlotte.
- the CEO if the combined company was Hugh McColl
Friendly merger - Ans: Target Board approves and agrees on a price/shares
Hostile Takeover - Ans: At some point in the process, the target board says no to
the deal
What are some reasons for an issue in the merger process between the target and
the bidder? - Ans: -Valuation of the target company could be off
Why might a target board in good faith decline a valuation of their current value in
a merger deal? - Ans: If they think that they will grow fast than what the street
thinks in the future years
- or if the board or executives feel as though they will lose their jobs in the deal
and want to continue to hold their positions
Which legal structure is more likely to be used in a hostile takeover? A merger or a
tender offer? Why? - Ans: A tender offer: this has a lot to do with publicity. This
will put pressure on management of the company being offered the merger, by
letting shareholders know of the offer.
What gives the target board a reason to say no to the offer? - Ans: Ownership -
property rights: if you own the assets, you don't legally have to surrender the
property
- often, agency costs are the reason the target board doesn't want to sell their
company (losing their job)
Common in the 80s, what gives the target board the bargaining power to resist a
hostile takeover? - Ans: If a company/firm/person acquires 10% of shares, the
target board can issue more shares to dilute the 10% (sharks)
What percent of shares of a corporation do you need to own to establish
supermajority? - Ans: 70% - and there must be a vote to establish the possibilities
Poison Pill - Ans: Similar to dilution of common-stock, but using preferred stock.
In the instance of a hostile takeover (say someone buying up all the shares in
attempt to take control of the company), the target firm can issue preferred stock to
all shareholders for a cheap price, making the common-stock worthless.
, Page 3 of 20
Who cam up with the poison pill? - Ans: Martin Lipton
Is there a shareholder vote to issue a poison pill? - Ans: No there is not, however,
there is a shareholder vote necessary for the dilution of shares or establishing a
supermajority
What happened in the Oracle takeover of PeopleSoft? - Ans: Example of a hostile
takeover. At one point it became a proxy-contest: shareholders are given their right
to vote but not everybody can attend to vote, so they send in their votes to the
board in order to represent them.
What is an issue with hostile takeovers? - Ans: it is incredibly difficult for buyers
to conduct du diligence without the cooperation of the target's management
Engelhard and BASF merger - Ans: Engelhard was a New Jersey based chemical
company, and BASF was a German company.
- BASF wanted to buy Engelhard in 2005-2006, to which they would say no.
- But BASF and Engelhard had entered into a confidentiality agreement where
Engelhard would share private information with BASF
- In return to Engelhard books, BASF agreed to not pusue any additional hostile
measures for one month.
- Engelhand was hoping for another offer in the bidding war
Horizontal Integration - Ans: merging companies that results in a decrease of
competition in the market. Ex: Coke and Pepsi or HP and Compaq
*don't say that it is a merger between two companies in the same industry*
- catches the attention of antitrust lawmakers because this is more likely to increase
concentration in the market and and reduce competition.increase pricing
-considered geographic expansion
Vertical integration - Ans: Combining companies to up the supply chain or to
increase distribution channels.
ex: Oil producer combines with a pipeline
What was the payment for NationsBank to Acquire BofA? - Ans: S-4 document
issuing stock to finance the merger.
M&A EXAM STUDY GUIDE EXAM LATEST UPDATE
2024\2025 QUESTIONS AND CORRECT ANSWERS|
GRADED A+
Why did the merger of Bank of America and Nations Bank occur? - Ans: this deal
created the first coast to coast banking company
- this deal will bring in more customers because it creates convenience when
traveling from coast to coast (less fees etc.)
when did the bank merger between Bank of America and Nations Bank occur? and
why? - Ans: 1998
- in 1994, federal law was passed that you could operate across any state as a bank
- thus, this deregulation made it now legal which increased the likelihood of
success
- this was due to political and economic conditions
What makes a deal likely to pass antitrust laws? - Ans: If the merger is productive
and convenient for the customer, the better.
When will a merger have issues with antitrust laws? - Ans: If the merger is
designed to increase prices and decrease competition
Why might technology have had an impact on the Bank of America and
NationsBank Deal? - Ans: ATMs were readily available at this time.
Information in NationsBank - Ans: -NCNB stands for North Carolina Nations
Banks
- CEO: Hugh McCoe
- Headquartered in Charlotte
How was Bank of America initially formed in 1998? - Ans: Nations Bank acquired
BankAmerica, and was then named Bank of America to operate across states
What was Bank of America's founded as? - Ans: Bank of Italy by Amadeo Gianini.
Where was BankAmerica headquartered and NationsBank headquartered before
and after their merger? - Ans: -BankAmerica was headquartered in San Fransisco
before the merger
-NationsBank was headquartered in Charlotte before the merger.
,Page 2 of 20
After: they became Bank of America and headquartered themselves in Charlotte.
- the CEO if the combined company was Hugh McColl
Friendly merger - Ans: Target Board approves and agrees on a price/shares
Hostile Takeover - Ans: At some point in the process, the target board says no to
the deal
What are some reasons for an issue in the merger process between the target and
the bidder? - Ans: -Valuation of the target company could be off
Why might a target board in good faith decline a valuation of their current value in
a merger deal? - Ans: If they think that they will grow fast than what the street
thinks in the future years
- or if the board or executives feel as though they will lose their jobs in the deal
and want to continue to hold their positions
Which legal structure is more likely to be used in a hostile takeover? A merger or a
tender offer? Why? - Ans: A tender offer: this has a lot to do with publicity. This
will put pressure on management of the company being offered the merger, by
letting shareholders know of the offer.
What gives the target board a reason to say no to the offer? - Ans: Ownership -
property rights: if you own the assets, you don't legally have to surrender the
property
- often, agency costs are the reason the target board doesn't want to sell their
company (losing their job)
Common in the 80s, what gives the target board the bargaining power to resist a
hostile takeover? - Ans: If a company/firm/person acquires 10% of shares, the
target board can issue more shares to dilute the 10% (sharks)
What percent of shares of a corporation do you need to own to establish
supermajority? - Ans: 70% - and there must be a vote to establish the possibilities
Poison Pill - Ans: Similar to dilution of common-stock, but using preferred stock.
In the instance of a hostile takeover (say someone buying up all the shares in
attempt to take control of the company), the target firm can issue preferred stock to
all shareholders for a cheap price, making the common-stock worthless.
, Page 3 of 20
Who cam up with the poison pill? - Ans: Martin Lipton
Is there a shareholder vote to issue a poison pill? - Ans: No there is not, however,
there is a shareholder vote necessary for the dilution of shares or establishing a
supermajority
What happened in the Oracle takeover of PeopleSoft? - Ans: Example of a hostile
takeover. At one point it became a proxy-contest: shareholders are given their right
to vote but not everybody can attend to vote, so they send in their votes to the
board in order to represent them.
What is an issue with hostile takeovers? - Ans: it is incredibly difficult for buyers
to conduct du diligence without the cooperation of the target's management
Engelhard and BASF merger - Ans: Engelhard was a New Jersey based chemical
company, and BASF was a German company.
- BASF wanted to buy Engelhard in 2005-2006, to which they would say no.
- But BASF and Engelhard had entered into a confidentiality agreement where
Engelhard would share private information with BASF
- In return to Engelhard books, BASF agreed to not pusue any additional hostile
measures for one month.
- Engelhand was hoping for another offer in the bidding war
Horizontal Integration - Ans: merging companies that results in a decrease of
competition in the market. Ex: Coke and Pepsi or HP and Compaq
*don't say that it is a merger between two companies in the same industry*
- catches the attention of antitrust lawmakers because this is more likely to increase
concentration in the market and and reduce competition.increase pricing
-considered geographic expansion
Vertical integration - Ans: Combining companies to up the supply chain or to
increase distribution channels.
ex: Oil producer combines with a pipeline
What was the payment for NationsBank to Acquire BofA? - Ans: S-4 document
issuing stock to finance the merger.
