Podcast
Questions and Answers
Mergers and Acquisitions (M&A) can create value for shareholders.
Mergers and Acquisitions (M&A) can create value for shareholders.
True (A)
Why do companies that are targeted for M&A sometimes object to the takeover, even if it's beneficial for their shareholders?
Why do companies that are targeted for M&A sometimes object to the takeover, even if it's beneficial for their shareholders?
The management of the targeted company might object to the takeover due to concerns about losing their jobs, control, or company culture. They may also believe that the offer price undervalues the company.
What is the 'winner's curse' in M&A?
What is the 'winner's curse' in M&A?
The 'winner's curse' refers to the situation where the winning bidder in an auction ends up paying more than the actual value of the target company.
If you are the acquirer in an M&A transaction, should you pay for the target company using your own stock or cash, and when?
If you are the acquirer in an M&A transaction, should you pay for the target company using your own stock or cash, and when?
It is always beneficial for the acquirer to pay for the target company with cash when the target is undervalued.
It is always beneficial for the acquirer to pay for the target company with cash when the target is undervalued.
What is the 'greenshoe' provision in IPOs and seasoned equity offerings?
What is the 'greenshoe' provision in IPOs and seasoned equity offerings?
The number of publicly listed firms in the US has been increasing in the last 25 years.
The number of publicly listed firms in the US has been increasing in the last 25 years.
The share price of a firm typically rises on the day it announces a seasoned equity offering.
The share price of a firm typically rises on the day it announces a seasoned equity offering.
Flashcards
M&A shareholder value
M&A shareholder value
Mergers and Acquisitions (M&A) can create value for shareholders if done strategically and efficiently.
Target management objections
Target management objections
Target company management may oppose a takeover even when it's beneficial to shareholders. Reasons include personal concerns, different strategies, etc.
Golden parachute
Golden parachute
Compensation for target management in a hostile takeover, to encourage agreement.
Winner's curse
Winner's curse
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Acquirer's stock payment
Acquirer's stock payment
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Cash payment in undervalued target
Cash payment in undervalued target
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Greenshoe in IPO
Greenshoe in IPO
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Decreased public firms
Decreased public firms
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Seasoned equity offering drop
Seasoned equity offering drop
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Study Notes
Mergers and Acquisitions (M&A)
- M&A: Does M&A create value for shareholders?
- M&A: Why do company managers sometimes resist takeovers, even if they benefit shareholders? How might golden parachutes/handshakes help in resolving this?
- M&A: What is the "winner's curse" in M&A transactions?
- M&A: When acquiring a company, should one use stock or cash, especially if the acquirer's stock is overvalued?
- M&A: Why pay with cash when the target is undervalued?
Equity Offerings
- Equity offerings: What are the "greenshoe" options in IPOs and follow-up offerings?
- Equity offerings: Why has the number of publicly traded companies decreased in the past 25 years?
- Equity offerings: Why do share prices typically fall the day a seasoned equity offering is announced?
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