M&A Modeling Exam Answers from Wall Street Prep
LATEST VERSION 2025 QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS) |ALREADY
GRADED A
Why might technology have had an impact on the Bank of America and
NationsBank Deal? - CORRECT ANSWER-ATMs were readily available at this
time.
Information in NationsBank - CORRECT ANSWER--NCNB stands for North
Carolina Nations Banks
- CEO: Hugh McCoe
- Headquartered in Charlotte
How was Bank of America initially formed in 1998? - CORRECT ANSWER-Nations
Bank acquired BankAmerica, and was then named Bank of America to operate
across states
What was Bank of America's founded as? - CORRECT ANSWER-Bank of Italy by
Amadeo Gianini.
,Where was BankAmerica headquartered and NationsBank headquartered before
and after their merger? - CORRECT ANSWER--BankAmerica was headquartered
in San Fransisco before the merger
-NationsBank was headquartered in Charlotte before the merger.
After: they became Bank of America and headquartered themselves in Charlotte.
- the CEO if the combined company was Hugh McColl
Friendly merger - CORRECT ANSWER-Target Board approves and agrees on a
price/shares
Hostile Takeover - CORRECT ANSWER-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? - CORRECT ANSWER--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? - CORRECT ANSWER-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
Why did the merger of Bank of America and Nations Bank occur? - CORRECT
ANSWER-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? - CORRECT ANSWER-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? - CORRECT ANSWER-If the
merger is productive and convenient for the customer, the better.
When will a merger have issues with antitrust laws? - CORRECT ANSWER-If the
merger is designed to increase prices and decrease competition
Which legal structure is more likely to be used in a hostile takeover? A merger or
a tender offer? Why? - CORRECT ANSWER-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? - CORRECT
ANSWER-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? - CORRECT ANSWER-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? - CORRECT ANSWER-70% - and there must be a vote to establish
the possibilities
Poison Pill - CORRECT ANSWER-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.
Who cam up with the poison pill? - CORRECT ANSWER-Martin Lipton
Is there a shareholder vote to issue a poison pill? - CORRECT ANSWER-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? - CORRECT ANSWER-
Example of a hostile takeover. At one point it became a proxy-contest:
LATEST VERSION 2025 QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS) |ALREADY
GRADED A
Why might technology have had an impact on the Bank of America and
NationsBank Deal? - CORRECT ANSWER-ATMs were readily available at this
time.
Information in NationsBank - CORRECT ANSWER--NCNB stands for North
Carolina Nations Banks
- CEO: Hugh McCoe
- Headquartered in Charlotte
How was Bank of America initially formed in 1998? - CORRECT ANSWER-Nations
Bank acquired BankAmerica, and was then named Bank of America to operate
across states
What was Bank of America's founded as? - CORRECT ANSWER-Bank of Italy by
Amadeo Gianini.
,Where was BankAmerica headquartered and NationsBank headquartered before
and after their merger? - CORRECT ANSWER--BankAmerica was headquartered
in San Fransisco before the merger
-NationsBank was headquartered in Charlotte before the merger.
After: they became Bank of America and headquartered themselves in Charlotte.
- the CEO if the combined company was Hugh McColl
Friendly merger - CORRECT ANSWER-Target Board approves and agrees on a
price/shares
Hostile Takeover - CORRECT ANSWER-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? - CORRECT ANSWER--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? - CORRECT ANSWER-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
Why did the merger of Bank of America and Nations Bank occur? - CORRECT
ANSWER-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? - CORRECT ANSWER-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? - CORRECT ANSWER-If the
merger is productive and convenient for the customer, the better.
When will a merger have issues with antitrust laws? - CORRECT ANSWER-If the
merger is designed to increase prices and decrease competition
Which legal structure is more likely to be used in a hostile takeover? A merger or
a tender offer? Why? - CORRECT ANSWER-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? - CORRECT
ANSWER-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? - CORRECT ANSWER-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? - CORRECT ANSWER-70% - and there must be a vote to establish
the possibilities
Poison Pill - CORRECT ANSWER-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.
Who cam up with the poison pill? - CORRECT ANSWER-Martin Lipton
Is there a shareholder vote to issue a poison pill? - CORRECT ANSWER-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? - CORRECT ANSWER-
Example of a hostile takeover. At one point it became a proxy-contest:
