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Question
In emerging countries where financial statements may be haphazard and gaining access to the information necessary to adequately assess risk is limited, it may be impossible to perform an adequate due diligence. Under these circumstances, acquirers may protect themselves by including a put option in the agreement of purchase and sale. Such an option would enable the buyer to require the seller to repurchase shares from the buyer at a predetermined price under certain circumstances. True or False
Answer
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Related questions
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An excessively long list of screening criteria used to develop a list of potential acquisition targets can severely limit the number of potential candidates. True or False
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Banks are commonly used to provide bridge or temporary financing to pay all or a portion of the purchase price and meet possible working capital requirements until permanent financing can be found. True or False
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Acquiring companies often find themselves with certain assets and operations of the acquired company that do not fit their primary strategy. Such assets may be divested to fund future investments. True of False
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Management may sell assets to fund diversification opportunities? True or False
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When a firm is unable to pay its liabilities as they come due, it is said to be in bankruptcy. True or False
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Tracking stocks may create internal operating conflicts among the parents business units in terms of how the consolidated firms cash is allocated among its business units. True or False
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Both a divestiture and a spin-off generally generate a cash infusion for the parent. True or False
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In deciding to sell a business, a parent firm should compare the business after-tax value in sale with its pre-tax value to the parent as part of the parent.
True or False
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Empirical studies show that the desire by parent firms to increase strategic focus is an important motive for exiting businesses. True or False
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A joint venture is rarely an independent legal entity such as a corporation or partnership.
True or False
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Give examples of how the partners objectives differ.
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What factors may have contributed to the decision to discontinue efforts to implement the joint venture? Consider control, scope, financial, and resource contribution issues.
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Which of the following is true about integration planning? Without integration planning, integration is not likely to
a. Provide anticipated synergies
b. Proceed without significant disruption to the target business operations
c. Proceed without significant disruption to the acquirers operations
d. Be completed without experiencing substantial customer attrition
e. All of the above
Q:
Which of the following is not typically true of post-closing evaluation of an acquisition?
a. It is important not to change the performance benchmarks against which the acquisition is measured
b. It is critical to ask the tough questions
c. It is an opportunity to learn from mistakes
d. It is commonly done
e. It is frequently avoided by acquiring firms because of the potential for embarrassment.