Mergers and Acquisitions Exam 1 Questions and Correct Answers
1 view 0 purchase
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...
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 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
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
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
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller twishfrancis. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.99. You're not tied to anything after your purchase.
