Mergers and Acquisitions
Chapter Exam Questions
Course Introduction
This course explores the strategic, financial, and managerial aspects of mergers and acquisitions (M&A). Students will examine the entire M&A process, including target selection, valuation, negotiation, deal structuring, due diligence, and post-merger integration. The course covers both domestic and cross-border deals, highlighting legal, regulatory, and ethical considerations. Through case studies and real-world examples, students will develop practical skills in assessing the value creation potential in M&A transactions and understanding the risks and challenges involved.
Recommended Textbook Investment Banking Valuation Leveraged Buyouts and Mergers and Acquisitions by Joshua Rosenbaum
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7 Chapters
201 Verified Questions
201 Flashcards
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Chapter 1: Comparable Companies Analysis
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Sample Questions
Q1) Given the following information, calculate a company's EBITDA margin. Operating income: $250.0m
Sales: $800.0m
D&A: $50.0m
Gross profit: $500.0m
A)40.0%
B)37.5%
C)31.25%
D)68.75%
Answer: B
Q2) What happens to the enterprise value EV) if a company issues equity and uses the proceeds to repay debt?
A)The EV goes up
B)The EV remains the same
C)The EV goes down
D)It depends
Answer: B
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Chapter 2: Precedent Transactions Analysis
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Sample Questions
Q1) Calculate the fixed exchange ratio based on the following transaction details.
<u><b>Transaction Details:</b></u>
AcquirerCo agrees to purchase TargetCo in an all-stock transaction valued at $2.0 billion.TargetCo's shareholders will receive one share of AcquirerCo's stock for every four shares of TargetCo stock they own.
A)4
B).25
C)1.00
D).5
Answer: B
Q2) Which form contains relevant data for an LBO in a private transaction involving non-public financing?
A)S-4
B)8-K
C)13E-3
D)None of the above
Answer: D
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Chapter 3: Discounted Cash Flow Analysis
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Sample Questions
Q1) Which variable generally represents the majority of a DCF valuation?
A)CAPM
B)Beta
C)WAAC
D)Terminal value
Answer: D
Q2) All of the following assets can be amortized EXCEPT:
A)Copyrights
B)Patents
C)Goodwill
D)PP&E
Answer: D
Q3) Which of the following is considered a use of cash?
A)Amortization
B)Depreciation
C)Decrease in net working capital
D)Increase in net working capital
Answer: D
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5
Chapter 4: Leveraged Buyouts
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Sample Questions
Q1) What can potentially be reduced or eliminated in the event that economic or operating performance declines?
A)Growth capex
B)Assets
C)Maintenance capex
D)PP&E
Q2) If an LBO target does not repay any debt during the investment horizon, how can the sponsor still realize a return?
A)If the target reinvests its cash into the business, the sponsor can realize a return by selling the target at a higher enterprise value
B)The sponsor cannot realize a return, as the enterprise value did not increase
C)The sponsor cannot realize a return, as the value of the sponsor's equity could not increase
D)It depends on the sponsor's internal rate of return
Q3) What is a private equity firm considered in an LBO?
A)A financial sponsor
B)A strategic investor
C)A passive investor
D)A limited partner
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Page 6
Chapter 5: Lbo Analysis
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Sample Questions
Q1) In an LBO, financing fees are an:
A)Deferred asset
B)Asset
C)Deferred expense
D)Current liability
Q2) What is a key credit risk management concern for underwriters in an LBO?
A)Ability to pay annual interest expense
B)Ability to repay a substantial portion of bank debt
C)Optimal financing structure
D)All of the above
Q3) In a pre-LBO model, what is the new line item "financing fees" under?
A)Long-term liabilities
B)Long-term assets
C)Short-term liabilities
D)Short-term assets
Q4) Which part of the pro forma balance sheet is affected by the debt schedule?
A)Long-term liabilities
B)PP&E
C)Short-term assets
D)Goodwill
Page 7
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Chapter 6: Sell-Side Ma
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Sample Questions
Q1) In the M&A sales process, projected financial information can be found in which document?
A)10-K
B)8-K
C)CIM
D)424B3
Q2) Which of the following criteria should be considered when evaluating a potential financial sponsor buyer?
A)Investment strategy
B)Fund size
C)Synergies
D)Both A and B
Q3) In which type of sale process does a seller have the least leverage?
A)Negotiated sale
B)Stock sale
C)Targeted auction
D)Broad auction
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Chapter 7: Buy-Side Ma
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Sample Questions
Q1) Which is the most common form of M&A deal structure?
A)Stock sale
B)Asset sale
C)Section 338 election
D)Cash on hand
Q2) Which form of integration expands an acquirer's geographic reach, product lines, services, or distribution channels?
A)Horizontal integration
B)Geographic integration
C)Vertical integration
D)Transitional integration
Q3) In a football field graphic for an M&A transaction, which of the following is a proxy for what a financial buyer would be willing to pay for the company?
A)Precedent transactions analysis
B)DCF
C)LBO
D)Comparable companies analysis
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