Types of Mergers and Control in the Market
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Questions and Answers

What type of merger involves the target's industry buying or selling to the acquirer's industry?

  • Monopoly Merger
  • Vertical Merger (correct)
  • Horizontal Merger
  • Conglomerate Merger
  • During which market phase is merger activity typically greater?

  • In a bear market
  • During economic expansions (correct)
  • During a recession
  • During economic contractions
  • Which reason for acquisition involves savings from producing goods in high volume?

  • Stock Swap
  • Economies of Scale (correct)
  • Monopoly Gains
  • Economies of Slope
  • What term describes peaks of heavy takeover activity followed by a few transactions?

    <p>Merger Waves</p> Signup and view all the answers

    Which type of merger involves the merger of two companies in the same industry that make products required at different stages of the production cycle?

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

    What mechanism is used when target shareholders swap their old stock for new stock?

    <p>Stock Swap</p> Signup and view all the answers

    Which takeover process involves comparing the target to similar firms to gain a rough estimate of value?

    <p>Valuation Process</p> Signup and view all the answers

    What is a common reason the board may not approve a premium offer in a takeover?

    <p>Might believe the acquirer is undervalued</p> Signup and view all the answers

    What are Revlon Duties typically associated with?

    <p>Seeking the highest value in a takeover</p> Signup and view all the answers

    How do staggered boards impact corporate governance?

    <p>Only allow a portion of directors to be elected each year</p> Signup and view all the answers

    What is the purpose of a 'poison pill' defense in a takeover?

    <p>Make it harder for unwanted takeovers</p> Signup and view all the answers

    In what situation would 'white squire' likely be involved?

    <p>When a large investor purchases shares with voting rights</p> Signup and view all the answers

    What does a 'freezeout merger' primarily involve?

    <p>Acquiring control through a tender offer and forming a new entity</p> Signup and view all the answers

    What is the main purpose of 'golden parachutes' in a takeover scenario?

    <p>Guarantee lucrative severance packages to senior managers</p> Signup and view all the answers

    'Toeholds' in a takeover context typically refer to:

    <p>Initial ownership stakes used to initiate takeover attempts</p> Signup and view all the answers

    'Leveraged buyouts' often involve:

    <p>'Shell corporations' borrowing to acquire companies</p> Signup and view all the answers

    'Proxy fights' in takeovers primarily aim to:

    <p>Entrench management more securely in the target company</p> Signup and view all the answers

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