Exam 7: Acquisition and Restructuring Strategies

Research evidence suggests that horizontal acquisitions result in higher performance when the firms have similar strategy, assets, and capabilities.

The majority of new product innovations are copied by rivals within ____ years of introduction.

Which of the following is NOT an attribute of a successful acquisition?

Case Scenario 2: Raptec Raptec was incorporated in 1991 and went public on the Nasdaq Stock Market in 1996. Raptec's strategy is to become the global leader in innovative storage solutions. Raptec is an S&P 500 and a Nasdaq Stock Market 100 member. The company's hardware and software solutions for eBusiness and Internet applications move, manage, and protect critical data and digital content. Raptec operates in three principal business segments: Direct Attached Storage ("DAS"), Storage Networking Solutions ("SNS") and Software. These hardware and software products are found in high-performance networks, servers, workstations, and desktops from the world's leading OEMs, and are sold through distribution channels to Internet service providers, enterprises, medium and small businesses, and consumers. Since the time it went public, Raptec has experienced rapid growth and consistently profitable operations. In early 2007, the company announced its plan to spin-off the software segment, subsequently incorporated as Axio, Inc., in the form of a fully independent and separate company. Software was Raptec's most profitable and fastest growing segment. By mid-2007 Raptec had completed the initial public offering of approximately 15% of Axio's stock, and then distributed the remaining Axio stock to Raptec's stockholders in a tax-free distribution. -(Refer to Case Scenario 2) Prior to the spin-off, how would you go about identifying the respective boundaries of the Raptec and Axio businesses?

Downscoping makes management of the firm more effective because it allows the top management team to better understand the remaining businesses.

Takeovers are unsolicited and unwanted acquisitions which are uniformly hostile.

The quickest and easiest way for a firm to diversify its portfolio of businesses is to make acquisitions.

Whole-firm LBOs tend to result in all the following negative outcomes EXCEPT

Transaction costs resulting from an acquisition refer to the direct and indirect costs resulting from the use of acquisition strategies to create synergies.

Baby Doe's, a designer and manufacturer of children's clothing, has decided to purchase a retail chain specializing in children's clothing. This purchase is a(an)

Research evidence suggests that horizontal acquisitions of firms with dissimilar characteristics result in higher performance levels.

Thomas is an upper-middle level manager for a firm that has been actively involved in acquisitions over the last 10 years. The firm has grown much larger as a result. Thomas has been dismayed to find that recently the managerial culture of the firm has been turning more and more to ____ controls.

Synergy is created by the efficiencies derived from economies of scale and economies of scope and by sharing resources across the businesses in the merged firm.

What is restructuring and what are its common forms?

Related acquisitions to build market power

When a firm is overly dependent on one or more products or markets, and the intensity of rivalry in that market is intense, the firm may wish to ____ by making an acquisition.

Research has shown that the more ____, the greater is the probability that an acquisition will be successful.

Research has shown that maintaining a low or moderate level of firm debt is critical to the success of an acquisition, even when substantial leverage was used to finance the acquisition itself.

Cross-border acquisitions are critical to U.S. firms competing internationally

Downsizing usually results in