Introduction to Industrial Finance and Capital Markets
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Questions and Answers

What is a common question that shareholders ask before any strategic operation?

  • How much?
  • Where?
  • Why not? (correct)
  • Who?

    • What is a key factor in determining the success of an offensive business strategy?

  • Cash-out value
  • Decrease in profitability
  • Market downturn
  • Adaptation to tech developments (correct)

    • What does neutralizing competitors contribute to in business strategy?

  • Creation of barriers to entry (correct)
  • Increase in social risks
  • Decrease in production capacities
  • Reduction of market penetration

    • In the context of strategic operations, what does 'cash-out' typically refer to?

    <p>Selling off assets</p> Signup and view all the answers

    Why is achieving the critical size important in business strategy?

    <p>To reach economies of scale</p> Signup and view all the answers

    What does defensive business strategy aim to protect against?

    <p>Market downturns</p> Signup and view all the answers

    What does 'IPO' stand for?

    <p>Initial Public Offering</p> Signup and view all the answers

    What stage in a company's lifecycle is represented by 'Seed' capital?

    <p>Birth</p> Signup and view all the answers

    What does 'LBO' stand for in the context of private equity?

    <p>Leveraged Buyout</p> Signup and view all the answers

    According to the image, which of the following best describes the market conditions in Europe for 'big LBOs'?

    <p>Uncertain</p> Signup and view all the answers

    Based on the graph, what is the trend for the amount of capital to invest in non-listed companies globally?

    <p>Increasing</p> Signup and view all the answers

    What is cited as the reason for the high proportion of extreme valuation multiples in Q3 2023?

    <p>Increase in transactions at multiples &lt; 7x EBITDA</p> Signup and view all the answers

    Who announced the intention to delete 1,850 posts, most of them in Finland, in the smartphones division inherited from Nokia?

    <p>Google</p> Signup and view all the answers

    How much did Google spend on the depreciation of the asset related to the removal of 1,850 posts?

    <p>$950 million</p> Signup and view all the answers

    Who acquired Motorola's cell phone branch for $12.5 billion before selling it to Lenovo for $2.9 billion?

    <p>Google</p> Signup and view all the answers

    Why did Google make this decision resulting in a huge loss when selling Motorola's cell phone branch to Lenovo?

    <p>To acquire more patents</p> Signup and view all the answers

    What was the main reason behind Google's intention to acquire patents related to smartphones back in 2011?

    <p>Protection against legal actions by phone manufacturers</p> Signup and view all the answers

    Who founded the American conglomerate General Electric in 1892?

    <p>Thomas Edison</p> Signup and view all the answers

    In a merger, what happens to the shareholders of the absorbed company?

    <p>They become shareholders of the acquiring company.</p> Signup and view all the answers

    What is the primary concern when evaluating a potential merger?

    <p>Determining the new ownership percentages of the merged company.</p> Signup and view all the answers

    In a joint venture, what happens to the original companies?

    <p>They continue to operate independently alongside the new joint venture company.</p> Signup and view all the answers

    What is the primary concern when evaluating a potential joint venture?

    <p>Determining the new ownership percentages of the joint venture company.</p> Signup and view all the answers

    In a merger, how many new entities are created?

    <p>0</p> Signup and view all the answers

    In a joint venture, how many new entities are created?

    <p>1</p> Signup and view all the answers

    What is the main advantage of external growth through horizontal integration?

    <p>Achieving economies of scale</p> Signup and view all the answers

    Which type of external growth is considered the riskiest?

    <p>Vertical integration</p> Signup and view all the answers

    What was Microsoft's primary motivation for acquiring Nokia's mobile phone division in 2013?

    <p>To enter the mobile phone hardware market</p> Signup and view all the answers

    Which of the following is NOT a potential advantage of external growth through acquisition?

    <p>Increasing competition in the market</p> Signup and view all the answers

    What is the primary challenge associated with post-merger integration, according to the survey mentioned?

    <p>Harmonizing corporate cultures</p> Signup and view all the answers

    Which type of external growth involves acquiring companies that produce complementary products or services?

    <p>Vertical integration</p> Signup and view all the answers

    What is the primary reason for pursuing external growth through conglomerate integration?

    <p>To diversify into new, unrelated industries</p> Signup and view all the answers

    Which of the following is a potential disadvantage of external growth through acquisition?

    <p>Integrating different corporate cultures</p> Signup and view all the answers

    Which of the following best describes the market conditions for 'big LBOs' in Europe according to the information provided?

    <p>The market conditions are favorable for big LBOs in Europe.</p> Signup and view all the answers

    What is the primary reason cited for the high proportion of extreme valuation multiples in Q3 2023?

    <p>Strong increase in transactions at multiples less than 7x EBITDA.</p> Signup and view all the answers

    What is the trend for the amount of capital available for investment in non-listed companies globally, based on the graph?

    <p>The amount of capital is increasing.</p> Signup and view all the answers

    What does the term 'LBO' stand for in the context of private equity?

    <p>Leveraged Buyout</p> Signup and view all the answers

    Which stage in a company's lifecycle is represented by 'Seed' capital?

    <p>Birth</p> Signup and view all the answers

    What does the term 'IPO' stand for?

    <p>Initial Public Offering</p> Signup and view all the answers

    What is the primary focus of the SKEMA PARIS 2024 M&A, Restructuring & L.B.O. course?

    <p>Valuation, structuring, and financing of controlling-equity transactions</p> Signup and view all the answers

    What does 'L.B.O.' stand for in the context of the course description?

    <p>Leveraged Buyout</p> Signup and view all the answers

    What aspect of business firm evaluation does the course provide the building blocks for understanding?

    <p>Activity assessment in mergers and acquisitions</p> Signup and view all the answers

    In what type of growth does the course NOT focus on through acquisition?

    <p>Diversification</p> Signup and view all the answers

    Which of the following best describes the purpose of the SKEMA PARIS 2024 M&A, Restructuring & L.B.O. course?

    <p>Providing background on controlling-equity transactions</p> Signup and view all the answers

    What is the primary factor that influences the valuation of a company, according to the text?

    <p>The company's intrinsic characteristics</p> Signup and view all the answers

    Which of the following is not listed as a potential shareholder strategy in the text?

    <p>Hostile takeover</p> Signup and view all the answers

    What is the key point emphasized regarding strategy in the text?

    <p>Aligning the business strategy with the shareholder strategy</p> Signup and view all the answers

    Which of the following is not a factor that should guide the thought process in valuation?

    <p>Discounted Cash Flow (DCF) analysis</p> Signup and view all the answers

    What does the text suggest about the suitability of using a single valuation method for all situations?

    <p>Different valuation methods should be used for different contexts</p> Signup and view all the answers

    What is a key consideration when evaluating a potential joint venture?

    <p>The alignment between business and shareholder strategies</p> Signup and view all the answers

    What is the main difference between Acquisition and Merger in terms of shareholders?

    <p>Shareholders from the acquired company become shareholders of the acquiring company in a Merger, but not in an Acquisition.</p> Signup and view all the answers

    Why is valuating Company B important before an acquisition?

    <p>To estimate the potential value of Company A after the acquisition.</p> Signup and view all the answers

    What happens to original shareholders A and B in an Acquisition after the process is completed?

    <p>They are both shareholders of the newly formed entity.</p> Signup and view all the answers

    In a Joint Venture, what is a common reason for creating this form of business combination?

    <p>To share risks and resources while maintaining independence.</p> Signup and view all the answers

    Why might there be no point in valuating Company A if the payment for acquisition is in cash?

    <p>The value of Company A would not impact the acquisition price.</p> Signup and view all the answers

    What is the primary reason for considering the value of entities in business combinations?

    <p>To evaluate the potential worth of entities involved in the combination.</p> Signup and view all the answers

    What percentage of General Electric's total turnover comes from financial services?

    <p>Up to 33%</p> Signup and view all the answers

    What did General Electric announce in April 2015 regarding its financial subsidiary, GE Capital?

    <p>The sale of $26.5 billion worth of real estate assets</p> Signup and view all the answers

    How much time did General Electric initially give itself to exit the banking sector and sell its financial activities?

    <p>Two years</p> Signup and view all the answers

    What additional sale did General Electric announce just two weeks after the initial $23 billion real estate asset sale?

    <p>The sale of $74 billion worth of trade receivables</p> Signup and view all the answers

    Which company was the expected buyer of the $74 billion trade receivables portfolio from General Electric?

    <p>Wells Fargo</p> Signup and view all the answers

    What did General Electric announce in October 2017 regarding its downsizing operation?

    <p>The separation of $20 billion worth of activities</p> Signup and view all the answers

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