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Question
Why are payment-in-kind securities (e.g., debt or preferred stock) particularly well suited for financing LBOs? Under what circumstances might they be most attractive to lenders or investors?
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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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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The parent firm generally retains control of the business involved in an equity carve-out. True or False
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Equity carve-outs have some of the characteristics of both divestitures and spin-offs. 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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Companies wishing to do business abroad often enter into an alliance with an indigenous company to facilitate entry into a foreign market. The foreign company is usually the majority owner in such relationships. 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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To what extent are the problems plaguing the venture today a reflection of failure to? communicate during the negotiations to form the joint venture? What should they have done differently?
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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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Do you think it is likely that the new company will become highly entrepreneurial and innovative? Why? / Why not? What can the parents do to stimulate the development of this type of an environment within the new company?
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Describe the advantages of the supply agreement to Garmin compared to outright acquisition of Tele Atlas?
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Why was Mattel interested in diversification?
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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.