Exam 20: External Growth Through Mergers

In planning mergers there is a tendency to _____ synergistic benefits.

If the acquiring firm's P/E ratio is greater than the P/E of the acquired firm, the surviving firm will automatically get an increase in E.P.S.

The merger movement rebounded in 1990s after a few slow years due to which of the following factors?

Vertical integration is usually prohibited or severely restricted by government competition regulations.

Which of the following is not a financial motive but rather an operating motive for merger and consolidation?

A pacman defence involves

Existing management of a firm is almost always ready to accept an offer for the purchase of the firm at a price above the market.

One of the primary motives of merger activity is that acquiring companies find it less expensive to buy assets than to build.

A pooling of interests treatment of a merger stated simply means that the financial statements of the two firms are combined with only some minor adjustments.

Mergers often improve the financing flexibility that a larger company has available.

"Poison pills" are strategies that reduce the value of a firm if it is taken over by a corporate raider.

By using cash instead of stock, a company may diminish the perceived dilutive effects of a merger.

Shareholders of acquired firms in mergers tend to be more concerned with future earnings and dividends exchanged than with the market value exchanged.

The term "Reverse LBO" refers to a company that had previously gone from a public company to a private company and sells stock to the public years later.

Synergy is said to take place when the whole is less than the sum of the parts.

Dilution in earnings per share occurs when a company with

A purchase of assets merger recording is desirable due to the possibility of the creation of goodwill on the books of the surviving firm.

A tax loss carryforward of $1,000,000 for company ZZZ is not usually worth $1,000,000 in present value to a firm that might acquire company ZZZ.

A white knight benefits the

The 1990s had a slowdown in merger activity because of the credit crunch characteristic of this period.