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Mergers and Acquisitions Exam 1 Questions and Correct Answers $8.99   Add to cart

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Mergers and Acquisitions Exam 1 Questions and Correct Answers

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  • Course
  • M&A Modeling
  • Institution
  • M&A Modeling

Intro to M&A - M&A is highly cyclical - Median deal sizes are increasing - Valuations: at or near record highs and stable - Covid initially slowed down market activity, but now fourth quarter activity is improving quickly Paths to drive growth Build it => Research & development Buy it => Mer...

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  • August 14, 2024
  • 7
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • M&A Modeling
  • M&A Modeling
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Mergers and Acquisitions Exam 1
Questions and Correct Answers
Intro to M&A ✅- M&A is highly cyclical
- Median deal sizes are increasing
- Valuations: at or near record highs and stable
- Covid initially slowed down market activity, but now fourth quarter activity is improving
quickly

Paths to drive growth ✅Build it => Research & development
Buy it => Mergers & Acquisitions

M&A failure rate ✅65% to 85%
- poor strategy
- poor integration

M&A objective ✅Add value to business, maximize shareholding wealth
- improve company's sustainable competitive advantage
- realization of synergies
- effective integration

Revenue synergies ✅Increase and diversify sources of revenue by the acquisition of
new and complementary product and service offerings

Operational / Cost synergies ✅- Increase production capacity through acquisition of
workforce and facilities
- Increase operational efficiency and expertise
- Increase research and development expertise and programs

Market Synergies ✅Increase market share and economies of scale

Financial Synergies ✅Reduction of financial risk and potentially lower borrowing costs

SWOT Analysis ✅Strengths, weaknesses, opportunities, Threats

Porter's 5 forces ✅Industry rivalry- Bargaining power of suppliers, threats of
substitutes, bargaining power of buyers, threats of new entrants

what is the business model? ✅PEST: political, economic, social, technology
MOST: Mission, objectives, strategies, and tactics

Core strengthening acquisition ✅Buying the competition and geographical target
- high degree of relatedness to core business

, - high degree of synergy potential
- High level of required integration

Core extension acquisition ✅Related (constrained) and value chain acquisition
- Medium degree of relatedness to core business
- Medium synergy potential
- Medium level of required integration

Core Shifting acquisition ✅Related (linked) and Unrelated conglomerate acquisition
- Low degree of relatedness to core business
- Low synergy potential
- Low level of require integration

Horizontal Merger ✅When 2 businesses combine that operate in the same industry or
sector (ex: Coca Cola decides to merge with Pepsico)

Vertical Merger ✅When a company decides to purchase its supplier or distributor. (ex:
when Pepsico decided to purchase the company that bottles their products)

Conglomerate M&A ✅When a company decides to purchase a business in a different
industry or sector. (EX: when Altria a tobacco company decided to purchase Kraft which
primarily operates in the food industry)

Friendly takeover ✅When a company acquires a target company after the target
company's board of directors accepts the acquisition offer

Hostile takeover ✅When a company acquires a target company after the target
company's board of directors rejects the acquisition offer. The acquirer may pursue a
tender offer for the target's outstanding shares directly to its shareholders at a premium
to the target's share price.

Reverse takeover ✅When a private company acquires a public company and therefore
avoids the IPO process while gaining access to the public markets

Concentrated growth (grand strategies) ✅Single dominant product - increase present
product sales in present market

Market development ✅Sell existing products in New markets

Product development ✅new products for present markets

Innovation ✅create new product

Horizontal acquisition ✅similar firms in same stage of production / marketing chain

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