SIGNATU NAME a 1. The first big merger wave occurred during the early part of the last century and is characterized by: The use of extensive debt in the form of junk bonds b. The formation of large conglomerates. The use of leveraged buyouts. d The formation of monopolies. The use of appreciating stock as the form of currency to pay for the merger. c e (2 2. Which of the following statements is correct? 2. In the 1980s the use of greenmail was legal. b. Regulations in the United States prohibit acquiring firms from using common stock to purchase another fimm A conglomerate merger is where a fimm combines with another firm in the same industry A white knight is term for an acquirer that will then spare the jobs of senior management for a period of one-year. e A golden parachute is a technique whereby the acquirer secretly establishes a bank account for the target CEO 30 th the merger will go forward. c 3 Which of the following statements is most correcr? (26 The high value of the U.S. dollar relative to Japanese and European currencies in the 19803, made U.S. companies comparatively inexpensive to foreign buyers, spurring many mergers, b. During the 1980s, the Reagan and Bush administrations tried to foster greater competition and they were adamant about preventing the loss of competition, thus, most large mergers were disallowed The expansion of the junk bond market made debt more freely avilable for large acquisitions and LBOs in the 1950s, and thus, it resulted in an increased level of merger activity d Given the low interest rates of the late 1990s many of the acquiring firms, such as Cisco, made all cash offers to buy firms. In the late 1990s many of the mergers had premiums of only 5-10% e 4. 2 5. 2 Which of the following statements is not correct? (26) M&A analysis is similar to a capital budgeting analysis except that you are acquiring the equity M&A analysis relies on the constant growth model to value the residual part of the target fin M&As provide the cheapest means of achieving diversification d About 50% of all mergers are not successful e M&A involve many non-financial concerns such as corporate culture which may not be easy to evaluate Which of the following statements is most correct? (26) Leveraged buyouts (LBOs) are where a firm issues equity and uses the proceeds to take a fire public b. In a typical LIBO, bondholders do well but shareholders realize a decline in value Firms are unable to sell any assets in the first five years following a leverage buyout dLBOs are no longer available due to an SEC regulation passed in 1996, LBO: occur when an acquirer borrows against the target's assets to buyout the targets.equity holders The term "poison pills: (26 Refers to a offensive tactic that allows a firm to acquire another firm through the use of a tender offer also known as a pl Refers to the tactic that allows a poisoned" manager to sneak onto the board of directors and then encourage a merger Refers to the tactic of taking on debt with a provision that allows the debt to be in default if takeoveratreept is made & Refers to the compensation that is paid to management in the event of a takeover bid Refers to the amount of money that is over and above twice the price of the stock that is required to be paid to the SEC e b SIGNATU NAME a 1. The first big merger wave occurred during the early part of the last century and is characterized by: The use of extensive debt in the form of junk bonds b. The formation of large conglomerates. The use of leveraged buyouts. d The formation of monopolies. The use of appreciating stock as the form of currency to pay for the merger. c e (2 2. Which of the following statements is correct? 2. In the 1980s the use of greenmail was legal. b. Regulations in the United States prohibit acquiring firms from using common stock to purchase another fimm A conglomerate merger is where a fimm combines with another firm in the same industry A white knight is term for an acquirer that will then spare the jobs of senior management for a period of one-year. e A golden parachute is a technique whereby the acquirer secretly establishes a bank account for the target CEO 30 th the merger will go forward. c 3 Which of the following statements is most correcr? (26 The high value of the U.S. dollar relative to Japanese and European currencies in the 19803, made U.S. companies comparatively inexpensive to foreign buyers, spurring many mergers, b. During the 1980s, the Reagan and Bush administrations tried to foster greater competition and they were adamant about preventing the loss of competition, thus, most large mergers were disallowed The expansion of the junk bond market made debt more freely avilable for large acquisitions and LBOs in the 1950s, and thus, it resulted in an increased level of merger activity d Given the low interest rates of the late 1990s many of the acquiring firms, such as Cisco, made all cash offers to buy firms. In the late 1990s many of the mergers had premiums of only 5-10% e 4. 2 5. 2 Which of the following statements is not correct? (26) M&A analysis is similar to a capital budgeting analysis except that you are acquiring the equity M&A analysis relies on the constant growth model to value the residual part of the target fin M&As provide the cheapest means of achieving diversification d About 50% of all mergers are not successful e M&A involve many non-financial concerns such as corporate culture which may not be easy to evaluate Which of the following statements is most correct? (26) Leveraged buyouts (LBOs) are where a firm issues equity and uses the proceeds to take a fire public b. In a typical LIBO, bondholders do well but shareholders realize a decline in value Firms are unable to sell any assets in the first five years following a leverage buyout dLBOs are no longer available due to an SEC regulation passed in 1996, LBO: occur when an acquirer borrows against the target's assets to buyout the targets.equity holders The term "poison pills: (26 Refers to a offensive tactic that allows a firm to acquire another firm through the use of a tender offer also known as a pl Refers to the tactic that allows a poisoned" manager to sneak onto the board of directors and then encourage a merger Refers to the tactic of taking on debt with a provision that allows the debt to be in default if takeoveratreept is made & Refers to the compensation that is paid to management in the event of a takeover bid Refers to the amount of money that is over and above twice the price of the stock that is required to be paid to the SEC e b