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Question
Once the LBO has been consummated, the firm's perceived ability to meet its obligations to current debt and preferred stockholders often deteriorates because the firm takes on a substantial amount of new debt. The firm's pre-LBO debt and preferred stock may be revalued in the market by investors to reflect this higher perceived risk, resulting in a significant reduction in the market value of both debt and preferred equity owned by pre-LBO investors. True or False
Answer
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True or False
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Which of the following is not typically true of post-closing evaluation of an acquisition?
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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.