Question 1

Horizontal acquisitions increase a firm's market power by exploiting cost-based and revenue-based synergies.

Accepted Answer

A) True 
 B)False  True

Question 2

A merger is a strategy through which two firms agree to integrate their operations on a relatively coequal basis.

Accepted Answer

A) True 
 B)False  True

Question 3

Some finance scholars believe that high levels of debt always have a positive effect on a firm's management.

Accepted Answer

A) True 
 B)False  False

Question 4

Less than 20 per cent of all mergers and acquisitions are successful.

Accepted Answer

A) True 
 B)False

Question 5

________ are more frequent than internal product development processes in high-technology industries, as returns are more predictable.

Accepted Answer

A) Mergers and leveraged buyouts 
B) Acquisitions and bidding wars 
C) Leveraged buyouts and alliances 
D) Acquisition and alliances 
A) Mergers and leveraged buyouts 
B) Acquisitions and bidding wars 
C) Leveraged buyouts and alliances 
D) Acquisition and alliances

Question 6

As an attribute of a successful acquisition, a friendly acquisition usually results in:

Accepted Answer

A) effective integration 
B) easily obtained financing 
C) a long-term competitive advantage 
D) animosity between the management teams 
A) effective integration 
B) easily obtained financing 
C) a long-term competitive advantage 
D) animosity between the management teams

Question 7

What is a leveraged buyout (LBO) and what have been the results of such activities?

Accepted Answer

An LBO is a restructuring strategy throu

Question 8

Most acquisitions are friendly transactions, whereas mergers include hostile unfriendly deals.

Accepted Answer

A) True 
 B)False

Question 9

Downscoping generally leads to more positive outcomes than downsizing in the long term but not in the short term.

Accepted Answer

A) True 
 B)False

Question 10

What is restructuring and what are its common forms?

Accepted Answer

Restructuring refers to changes in a fir

Question 11

The short-term outcome of downsizing is:

Accepted Answer

A) reduced debt costs 
B) an emphasis on strategic controls 
C) organisational learning 
D) reduced labour costs 
A) reduced debt costs 
B) an emphasis on strategic controls 
C) organisational learning 
D) reduced labour costs

Question 12

Describe the seven problems in achieving a successful acquisition.

Accepted Answer

Integration difficulties: It may be diff

Question 13

Private synergy refers to:

Accepted Answer

A) synergy that takes place in a firm that is taken private through the use of junk bonds 
B) a benefit from merging the acquiring and target firms that only one or two individuals in a firm may recognise 
C) benefits resulting from a unique set of resources that are complementary between the acquiring and target firms in a merger 
D) benefits resulting from commonly found resources that both the acquiring and target firm have 
A) synergy that takes place in a firm that is taken private through the use of junk bonds 
B) a benefit from merging the acquiring and target firms that only one or two individuals in a firm may recognise 
C) benefits resulting from a unique set of resources that are complementary between the acquiring and target firms in a merger 
D) benefits resulting from commonly found resources that both the acquiring and target firm have

Question 14

Acquisitions are a risk-free alternative to entering new markets through internally developed products.

Accepted Answer

A) True 
 B)False

Question 15

Junk bonds are characterised by the:

Accepted Answer

A) small firms for which they are typically issued 
B) high-technology firms for which they are typically issued 
C) potential high returns offered to the bondholders 
D) low risk to the bondholders 
A) small firms for which they are typically issued 
B) high-technology firms for which they are typically issued 
C) potential high returns offered to the bondholders 
D) low risk to the bondholders

Question 16

A leveraged buyout refers to:

Accepted Answer

A) a firm restructuring itself by selling off unrelated units of the company's portfolio 
B) a firm pursuing its core competencies by seeking to build a top management team that comes from a similar background 
C) a restructuring action whereby the managers of a firm, its employees and/or an external party buy all of the assets of a business, financed largely with debt, and take the firm private 
D) an action where the management of a firm and/or an external party buy all of the assets of a business, financed largely with equity 
A) a firm restructuring itself by selling off unrelated units of the company's portfolio 
B) a firm pursuing its core competencies by seeking to build a top management team that comes from a similar background 
C) a restructuring action whereby the managers of a firm, its employees and/or an external party buy all of the assets of a business, financed largely with debt, and take the firm private 
D) an action where the management of a firm and/or an external party buy all of the assets of a business, financed largely with equity

Question 17

Which one of the following is not a challenge in relations to post-acquisition integration?

Accepted Answer

A) Exercising good financial control 
B) Melding two disparate corporate cultures 
C) Building effective working relationships 
D) Linking different financial and control systems 
A) Exercising good financial control 
B) Melding two disparate corporate cultures 
C) Building effective working relationships 
D) Linking different financial and control systems

Question 18

The higher the barriers to market entry, the greater the probability that a firm will acquire an existing firm to overcome those barriers.

Accepted Answer

A) True 
 B)False

Question 19

A takeover is a special type of acquisition wherein the target firm does not solicit the acquiring firm's bid; thus, takeovers are friendly acquisitions.

Accepted Answer

A) True 
 B)False

Question 20

Acquisitions between companies with headquarters in different countries are called cross-border acquisitions.

Accepted Answer

A) True 
 B)False

Horizontal acquisitions increase a firm's market power by exploiting cost-based and revenue-based synergies.

A merger is a strategy through which two firms agree to integrate their operations on a relatively coequal basis.

Some finance scholars believe that high levels of debt always have a positive effect on a firm's management.

Less than 20 per cent of all mergers and acquisitions are successful.

________ are more frequent than internal product development processes in high-technology industries, as returns are more predictable.

As an attribute of a successful acquisition, a friendly acquisition usually results in:

What is a leveraged buyout (LBO) and what have been the results of such activities?

Most acquisitions are friendly transactions, whereas mergers include hostile unfriendly deals.

Downscoping generally leads to more positive outcomes than downsizing in the long term but not in the short term.

What is restructuring and what are its common forms?

The short-term outcome of downsizing is:

Describe the seven problems in achieving a successful acquisition.

Private synergy refers to:

Acquisitions are a risk-free alternative to entering new markets through internally developed products.

Junk bonds are characterised by the:

A leveraged buyout refers to:

Which one of the following is not a challenge in relations to post-acquisition integration?

The higher the barriers to market entry, the greater the probability that a firm will acquire an existing firm to overcome those barriers.

A takeover is a special type of acquisition wherein the target firm does not solicit the acquiring firm's bid; thus, takeovers are friendly acquisitions.

Acquisitions between companies with headquarters in different countries are called cross-border acquisitions.

Strategic Management and Strategic Competitiveness

The External Environment: Opportunities, Threats, Industry Competition and Competitor Analysis

The Internal Environment: Resources, Capabilities, Core Competencies and Competitive Advantages

Business-Level Strategy

Competitive Rivalry and Competitive Dynamics

Corporate-Level Strategy

International Strategy

Cooperative Strategy

Corporate Governance

Organisational Structure and Controls

Strategic Leadership

Strategic Entrepreneurship

Filters

Exam 7: Acquisition and Restructuring Strategies

Horizontal acquisitions increase a firm's market power by exploiting cost-based and revenue-based synergies.

A merger is a strategy through which two firms agree to integrate their operations on a relatively coequal basis.

Some finance scholars believe that high levels of debt always have a positive effect on a firm's management.

Less than 20 per cent of all mergers and acquisitions are successful.

________ are more frequent than internal product development processes in high-technology industries, as returns are more predictable.

As an attribute of a successful acquisition, a friendly acquisition usually results in:

What is a leveraged buyout (LBO) and what have been the results of such activities?

Most acquisitions are friendly transactions, whereas mergers include hostile unfriendly deals.

Downscoping generally leads to more positive outcomes than downsizing in the long term but not in the short term.

What is restructuring and what are its common forms?

The short-term outcome of downsizing is:

Describe the seven problems in achieving a successful acquisition.

Private synergy refers to:

Acquisitions are a risk-free alternative to entering new markets through internally developed products.

Junk bonds are characterised by the:

A leveraged buyout refers to:

Which one of the following is not a challenge in relations to post-acquisition integration?

The higher the barriers to market entry, the greater the probability that a firm will acquire an existing firm to overcome those barriers.

A takeover is a special type of acquisition wherein the target firm does not solicit the acquiring firm's bid; thus, takeovers are friendly acquisitions.

Acquisitions between companies with headquarters in different countries are called cross-border acquisitions.

Strategic Management and Strategic Competitiveness

The External Environment: Opportunities, Threats, Industry Competition and Competitor Analysis

The Internal Environment: Resources, Capabilities, Core Competencies and Competitive Advantages

Business-Level Strategy

Competitive Rivalry and Competitive Dynamics

Corporate-Level Strategy

International Strategy

Cooperative Strategy

Corporate Governance

Organisational Structure and Controls

Strategic Leadership

Strategic Entrepreneurship

Filters