What to Expect
Various ways in which firms can acquire or merge with another firm...
What are merger, consolidation, acquisition of stock, and acquisition of assets?
Tactics designed to deter a hostile takeover that are instituted prior to any takeover attempt.
What is a poison pill and golden parachute?
The sale of assets, operations, divisions, and/or segments of a business to a third party.
What is a divestiture?
Tope and several of his friends collectively borrowed enough money to acquire all of the outstanding shares of Coburn & Collins Corporation. This transaction is known as...
What is leveraged buyout?
True or False: An Acquistion completed to diversify a firm will lower systematic risk and increase the value of the firm.
What is false?
Defensive tactics a potential target can employ...
What are corporate charter, repurchase and standstill agreements, poison pills and share rights plans, and going private and leveraged buyouts?
A ski equipment merging with a tennis equipment store is an example of improving operating efficiency through _________________.
What is complementary resource?
The distribution of shares in a subsidiary to existing parent company stockholders.
What is spin-off?
Ojomo Corporation recently acquired Fin, Incorporated. Ojomo determined that the transaction had a net present value of $2.2 million. This $2.2 million is called...
What is synergy?
True or False: Shareholders of the target firm must vote to approve an acquisition by stock.
What is false?
The total value of the acquired firm minus the cost of the acquisition to the bidder.
What is calculating the NP?
A firm turns a division into a separate entity and then sells shares in the division to the public, it is referred to as an _______.
What is equity carve-out?
A merger in which an entirely new firm is created and both the acquired firm and the acquiring firm cease to exist.
What is consolidation?
Studies conducted on mergers and acquisitions have concluded that these transactions are financially beneficial to..
What are target shareholders?
A _____ acquisition is considered an exchange instead of a sale, so no capital gain or loss occurs at the time of the transaction.
What is tax-free?
Values that are most important
What is Market Value
If an acquisition does not create value, then the earnings per share may increase but the stock price of the acquiring firm may remain the same or decline.
What is true?
The complete absorption of one company by another, wherein the acquiring firm retains its identity and the acquires firm ceases to exist as a separate entity.
What is Merger?
You should apply the rate of return that is relevant to the incremental cash flows.
What is evaluating an Acquistion?
In a targeted stock repurchase, payments made to potential bidders to eliminate unfriendly takeover attempts.
What is greenmail?
Acquistion by paying cash usually results in
What is a taxable transaction
The use of tax losses and surplus funds from an acquisition.
What are potential tax gains?
Used in an effort to circumvent the target firm's management, which is usually actively resisting.
What is Stock Acquisition?
The value of the merged firm exceeds the combined value of the separate firms.
What is if a merger creates synergy?
Shareholders in bidder firms seem to __________ on average.
What is neither win nor lose?