a
To identify:-The following statements are true or false.
Merger:
Merger is the combination of two entities into one in which shareholders of both the companies merge their resources into new company Merger is basically the result of merging the two or more companies into one.
Purchase Accounting Method for Mergers:
In the purchase accounting method the assets of the targeted company has to be recorded into the current market value in the books of acquiring company and
Synergy:
Synergy is a state in which two or more companies combined then they can perform better than the sum of their individual efforts in terms of productivity, revenue.
Taxable Merger:
Taxable merger is a merger in which one or both the companies have to pay the
Tax-Free Merger:
Tax-free merger is a merger in which none of the companies has to pay the taxes on the capital gains arise due to merger.
b
To identify:-The following statements are true or false.
c
To identify:-The following statements are true or false.
d
To identify:-The following statements are true or false.
e
To identify:-The following statements are true or false.
f
To identify:-The following statements are true or false.
Want to see the full answer?
Check out a sample textbook solutionChapter 29 Solutions
EBK CORPORATE FINANCE
- Examples of systematic risk include a new competitor in the marketplace with the potential to take significant market share from the company invested in, a regulatory change(which could drive down company sales), a shift in management, or a product TRUE OR FALSE?arrow_forwardIt is quite often we observe some firms takeover target firms from a different industry. If diversifying harms firm value and it is more efficient to make diversification at the investor (shareholder) level than at the firm level, why do you think the managements still choose to make diversified acquisitions?arrow_forwarda) What is a conglomerate merger and why are they more likely to be approved? b) Limit pricing is a strategy where a firm sets a low, but profitable, price to discourage entry. How does that differ from predatory pricing? c) What is "Share the gain, share the pain" theory?arrow_forward
- which of the following does not explain the poor performance of mergers and acquisitions ? i. Managers inaccurately value a target firm beacuse they believe the target firm is undervalued. ii. Mergers benefit may be underestimated iii. Managers mayhave priorities other than the interest of the shareholders a. II only b. III only c. I only d. e. II and III onlyarrow_forwardFrom an investor perspective ESOPs are the most valuable if used to help prevent takeovers but are much less valuable if designed and used to help improve worker productivity. IS THE SATEMENT TRUE OR FALSE?arrow_forwardReal options reflect the management's ability to adopt and later revise corporate investment decisions. Select one: True False Any strategic transaction can unlock additional values for both parties involved in the transaction, these additional benefits can't be accessed by each party separately. Select one: True False Book values do not mirror actual market values for manufacturing companies, but they may be more accurate for distribution firms. Select one: True False When a company invites other companies to acquire its business, its considered as a friendly acquisition.arrow_forward
- Diversification is often a poor motive for mergers because: vertical integration is rarely successful. investors can diversify on their own account. it does not produce economies of scale. the increase in taxes overcomes any gains in earnings.arrow_forwardHello, could you please answer the following question in details. Thank you very much! Are the following statements true or false? Justify your answer. Mergers inspired by vertical integration motives are very rare nowadays, as transaction costs have decreased substantially since the second merger wave. “It is always advisable for a company to diversify its activities, in order to limit the risk of being too exposed to one activity”arrow_forward“Merger may be profitable but are they good for the economy?” Explain your answer towards this statement.arrow_forward
- what if your company is being targeted by a SPAC would that be a good thing or a bad thing? What factors would you look at to make that determination? what are the pitfalls in selling a company?arrow_forwardWhat are some advantages of invetsting in industy competitors? ie., You own stock in Walgreens and you also choose to invest in a competitor such as CVS How would investing in an industry's competitor help ensure a satisfactory return even if the original company's value depreciates?arrow_forwardWhich of the following is true regarding IPO pricing? Answers: Underpricing is more popular which hurts the firm Underpricing is more popular which hurts the investment bank Overpricing is more popular which hurts the firm Overpricing is more popular which hurts the investment bankarrow_forward
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT