Mergers and Acquisitions Exam
Questions
Course Introduction
This course provides a comprehensive exploration of mergers and acquisitions (M&A), focusing on the strategic, financial, and legal aspects that drive corporate restructuring globally. Students will examine the rationale behind M&A transactions, valuation techniques, due diligence, deal structuring, negotiation strategies, and post-merger integration processes. The course incorporates case studies and real-world examples to illustrate the complexities and risks associated with M&A, addressing topics such as regulatory considerations, cross-border challenges, and the impact on stakeholders. By the end, students will gain practical tools and analytical frameworks for evaluating and executing successful M&A deals.
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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Page 2
Chapter 1: Comparable Companies Analysis
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28 Flashcards
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Sample Questions
Q1) Which of the following is likely to be a non-recurring item on an income statement?
A)SG&A
B)Interest expense
C)Depreciation
D)Goodwill impairment
Answer: D
Q2) For what company would a valuation metric like EV / Sales be helpful?
A)A company with high gross margins
B)A company with no earnings
C)A company with low gross margins
D)A company with no debt
Answer: B
Q3) Which of the following is both a pro and a con of performing a comparable companies analysis?
A)It is quick to perform
B)It is current data
C)It is relative to other companies
D)It is market based
Answer: D
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Page 3
Chapter 2: Precedent Transactions Analysis
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) The use of stock as a meaningful portion of a transaction generally leads to a:
A)Higher valuation
B)Lower valuation
C)Higher multiple
D)It depends
Answer: B
Q2) Calculate the equity value in a fixed exchange ratio structure given the following information.
<u><b>Transaction Details:</b></u>
TargetCo's shareholders will receive one share of AcquirerCo's common stock for every four shares of TargetCo's common stock.AcquirerCo's share price prior to the announcement was $20.00.TargetCo has 25 million shares outstanding.
A)$125.0mm
B)$100.0mm
C)$80.0mm
D)$50.0mm
Answer: A
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Chapter 3: Discounted Cash Flow Analysis
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) If a DCF is constructed on the basis of EBIT or EBITDA, what must be driven as a percentage of sales?
A)COGS
B)SG&A
C)Net working capital
D)D&A
Answer: C
Q2) What is used to calculate the expected return on a company's equity?
A)FCF
B)CAPM
C)DCM
D)EEM
Answer: B
Q3) In a DCF analysis, what is used to capture the remaining value of the target beyond the projection period?
A)Intrinsic value
B)Terminal Value
C)WACC
D)Enterprise Value
Answer: B
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Chapter 4: Leveraged Buyouts
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Sample Questions
Q1) What is the classification of a covenant requiring a borrower to maintain assets, collateral, or other securities?
A)Affirmative
B)Negative
C)Maintenance
D)Financial
Q2) A feature in the high yield market that allows the issuer to pay interest in the form of additional notes is called a:
A)Bridge loan
B)First lien
C)PIK
D)Term B loan
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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Chapter 5: Lbo Analysis
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Sample Questions
Q1) Calculate the total goodwill for a pro forma balance sheet given the following details.
<u><b>Details:</b></u>
Equity purchase price: $2,000
Book value: $1,700
Existing goodwill: $100
A)$100
B)$300
C)$200
D)$400
Q2) 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
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Chapter 6: Sell-Side Ma
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Sample Questions
Q1) What happens in a two-step tender process if the buyer fails to acquire enough of the target's shares within 20 business days?
A)The merger is "busted"
B)The buyer gets additional time
C)A shareholders meeting must be completed
D)None of the above
Q2) All of the following are valuation methodologies used by financial sponsors EXCEPT: A)LBO model
B)Precedent transitions analysis
C)Comparable companies analysis
D)Accretion/dilution) analysis
Q3) Stapled financing is an:
A)Optimal financing structure
B)Customized financing structure
C)Pre-packaged financing structure
D)None of the above
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Chapter 7: Buy-Side Ma
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Sample Questions
Q1) When an acquirer buys a target in the same or a closely related business, synergies tend to be:
A)Nonexistent
B)Greater
C)Lower
D)Unknown
Q2) All of the following are considered cost synergies EXCEPT:
A)Head count reduction
B)Consolidation of facilities
C)Lower cost of capital
D)Economies of scale
Q3) When is a merger accretive?
A)Acquirer's pro forma EPS is lower
B)Target's P/E is higher than acquirer's
C)Acquirer's P/E is lower than target's
D)Acquirer's P/E is higher than target's
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