Mergers & Acquisitions Self-Assessment...


TRUE or FALSE: M&A transactions deliver a premium return to shareholders of the target company, but buyers (on average) earn only a going rate of return.

TRUE or FALSE: Whenever an investor acquires 5% or more of a U.S. public company, it must disclose its intentions, the identities of all investors, their occupation, sources of financing, and the purpose of the acquisition.

TRUE or FALSE: Conventional wisdom that a diversification strategy destroys company value is currently being challenged.

TRUE or FALSE: The consensus among academics and practitioners is that 5% is a good representation of the market risk premium that should be used in the CAPM model of valuation.

TRUE or FALSE: Holding companies and their shareholders may be subject to triple taxation.

TRUE or FALSE: In evaluating the impact of an acquisition, Wall Street tends to value potential revenue synergies more highly than cost synergies.

TRUE or FALSE: Effective merger integration progresses through a series of phases that begins with strategic planning and ends with post-merger integration efforts.

TRUE or FALSE: Acquisition integration means effectively absorbing the target company into the culture and business systems of the acquirer.

TRUE or FALSE: Over the past few decades, over 25% of M&A transactions in the United States have been hostile or unfriendly takeover attempts.

TRUE or FALSE: Empirical evidence shows that unrelated diversification is an effective means of smoothing out the business cycle.

TRUE or FALSE: In a triangular cash merger, the target firm may either be merged into an acquirer's operating or shell acquisition subsidiary with the subsidiary surviving, or the acquirer's subsidiary is merged into the target firm with the target survinging.

TRUE or FALSE: A valuation estimation using the constant growth model involves the calculation of a terminal value.


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