Exam 18: Mergers, Lbos, Divestitures, and Business Failure

The actual ratio of exchange in a stock-exchange acquisition is the ratio of the

A key consideration in the holding company decision is

The firm in a merger transaction that is being pursued as a takeover potential is called the

All of the following are reasons for mergers EXCEPT

A firm's current structure is as follows: *Secured by fixed assets. Suggest a recapitalized capital structure that would reduce the debt/equity ratio (several solutions are feasible). Calculate the d/e ratio for the pre-reorganization capital structure and the post-reorganization capital structure.

A method of acquisition in which the acquiring firm exchanges its shares of stock for shares of the target company according to a predetermined ratio is called a leveraged buyout.

Generally, a combination of two firms of unequal size is called

Bankruptcy is business failure that occurs when a firm's liabilities exceed the fair market value of its assets.

If the P/E paid is greater than the P/E of the acquiring company, on a postmerger basis the target firm's EPS increases and the acquiring firm's EPS decreases.

In defending against hostile takeover attempts, a company will include provisions in the employment contracts of key executives that provide them with sizable compensation if the firm is taken over. This is called the ________ strategy.

An important aspect of the firm's reorganization plan is the recapitalization of the firm's capital structure. The goal of restructuring the firm's debt includes all of the following EXCEPT