WALL ST. PREP – M & A QUESTIONS AND VERIFIED SOLUTIONS 2024/2025 GRADED A+.

WALL ST. PREP – M & A QUESTIONS AND VERIFIED SOLUTIONS 2024/2025 GRADED A+. 2 / 8 1. Potential reasons to acquire another company: * Value Creation from Revenue and Cost Synergies Ownership ofTechnologyAssets(IP, Patents, ProprietaryTech-nology) * Talent Acquisitions (New Skilled Employees) * Expansion in Geographic Reach or into New Product/Service Markets * Diversification in Revenue Sources (Less Risk, Lower Cost ofCapital) * ReduceTime to Market with New ProductLaunches * Increased Number of Channels to Sell Products/Services * Market Leadership and Decreased Competition (if Horizontal Integration) * Achieve Supply Chain Efficiencies (if Vertical Integration) * Tax Benefits (if Target has NOLs) 2. Broad auction: In a broad auction, the sell-side bank will reach out to as many prospective buyers as possible to maximize the number of interested buyers. Sincecompetition directly correlates with the valuation, the goal is to cast a wide net to intensify an auction's competitiveness and increase the likelihood of finding thehighest possible offer (i.e., removing the risk of "leaving money on the table") 3. Targeted auction: In a targeted auction, the sell-side bank (usually under the client's direction) will have a shortlist of buyers contacted. These contacted buyersmay already have a strong strategic fit with the client or a pre-existing relationship with the seller. 4. Negotiatedsale:Anegotiated sale involves only a handful of potential buyers andis most appropriate when there's a specific buyer the seller has in mind. A potentialreason for this type of sale approach could be the seller intends to stay on and strongly values the partnership and growth opportunities. Under this approach, the speed of close and confidentiality are two distinct benefits. These deals are