M&A Exam 1 & 2 Correct Questions &
Answers(RATED A+)
Merger Wave 1 (1895-1905) - ANSWER A significant number of horizontal mergers
Merger Wave 2 (1925-1929) - ANSWER A significant number of vertical mergers
Merger Wave 3 (1965-1970) - ANSWER A significant number of diversifying/conglomerate mergers
Merger Wave 4a (1981-1987) - ANSWER An increase in the breakup of conglomerates
Wave 4b (1992-2000) - ANSWER An increase in strategic buyers looking for synergy
Does M&A pay for TARGET Shareholders? - ANSWER Increase in Value
Does M&A pay for ACQUIRER shareholders? - ANSWER at least conserves value
Does M&A pay for the total transaction? - ANSWER Increase in Value
This document includes provisions like a standstill agreement, permitted disclosure, and restrictions
on clubbing - ANSWER Confidentiality Agreement
In ________ sales, a firm can write up assets and use the depreciation for TAX purposes. - ANSWER
Asset
In ________ sales, a firm can write up assets and use the depreciation for US GAAP REPORTING
purposes. - ANSWER Both Asset and Stock
, What is goodwill? - ANSWER The excess paid over the identifiable value of the target's tangible and
intangible assets.
What are the reasons for M&A activity when markets and managers are acting rationally? - ANSWER
Industry Shocks, Agency costs & corporate governance
During this part of the deal the buyer and seller meet for the first time and the acquirer team can ask
the target management questions - ANSWER Management Presentation
What is a teaser - ANSWER Marketing material sent to potential bidders to raise awareness of an
auction.
Why are deferred tax liabilities created? - ANSWER
Besides price/value maximization, what are two other objectives that a seller might seek to acheive?
- ANSWER Strategic fit, Continuation of management
In which type of sale process does a seller have the least bargaining power? - ANSWER Negotiated
Sale
If we were preparing for a sale this coming year, where would we be most likely to set up a data
room? - ANSWER Online
In many instances, growth through acquisition is _________ than building a new business from
scratch. - ANSWER Cheaper and Faster (Both A & C)
What happens in a two step tender process if the buyer fails to acquire enough of the targets
shareholders within 20 business days? - ANSWER A shareholders meeting must be completed
Which act requires that both parties in a large M&A transaction file notifications and report forms to
the FTC and DoJ? - ANSWER Hart-Scott-Rodino Act
If an automobile manufacturer purchases a tire/rubber company, what form of integration is this? -
ANSWER Backward Integration
Answers(RATED A+)
Merger Wave 1 (1895-1905) - ANSWER A significant number of horizontal mergers
Merger Wave 2 (1925-1929) - ANSWER A significant number of vertical mergers
Merger Wave 3 (1965-1970) - ANSWER A significant number of diversifying/conglomerate mergers
Merger Wave 4a (1981-1987) - ANSWER An increase in the breakup of conglomerates
Wave 4b (1992-2000) - ANSWER An increase in strategic buyers looking for synergy
Does M&A pay for TARGET Shareholders? - ANSWER Increase in Value
Does M&A pay for ACQUIRER shareholders? - ANSWER at least conserves value
Does M&A pay for the total transaction? - ANSWER Increase in Value
This document includes provisions like a standstill agreement, permitted disclosure, and restrictions
on clubbing - ANSWER Confidentiality Agreement
In ________ sales, a firm can write up assets and use the depreciation for TAX purposes. - ANSWER
Asset
In ________ sales, a firm can write up assets and use the depreciation for US GAAP REPORTING
purposes. - ANSWER Both Asset and Stock
, What is goodwill? - ANSWER The excess paid over the identifiable value of the target's tangible and
intangible assets.
What are the reasons for M&A activity when markets and managers are acting rationally? - ANSWER
Industry Shocks, Agency costs & corporate governance
During this part of the deal the buyer and seller meet for the first time and the acquirer team can ask
the target management questions - ANSWER Management Presentation
What is a teaser - ANSWER Marketing material sent to potential bidders to raise awareness of an
auction.
Why are deferred tax liabilities created? - ANSWER
Besides price/value maximization, what are two other objectives that a seller might seek to acheive?
- ANSWER Strategic fit, Continuation of management
In which type of sale process does a seller have the least bargaining power? - ANSWER Negotiated
Sale
If we were preparing for a sale this coming year, where would we be most likely to set up a data
room? - ANSWER Online
In many instances, growth through acquisition is _________ than building a new business from
scratch. - ANSWER Cheaper and Faster (Both A & C)
What happens in a two step tender process if the buyer fails to acquire enough of the targets
shareholders within 20 business days? - ANSWER A shareholders meeting must be completed
Which act requires that both parties in a large M&A transaction file notifications and report forms to
the FTC and DoJ? - ANSWER Hart-Scott-Rodino Act
If an automobile manufacturer purchases a tire/rubber company, what form of integration is this? -
ANSWER Backward Integration
