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Test Bank: Mergers and Acquisitions Motives and Synergies

This document discusses mergers and acquisitions, including theories and synergies related to M&A. It provides multiple choice questions and answers about Trautwein's seven major theories of M&A, including empire building theory, monopoly theory, and process theory. The questions also cover different types of synergies such as revenue-generating, cost-reduction, tax, operations, and manufacturing synergies. Empire building theory proposes that managers execute M&A to expand their own empires rather than create shareholder wealth.

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258 views3 pages

Test Bank: Mergers and Acquisitions Motives and Synergies

This document discusses mergers and acquisitions, including theories and synergies related to M&A. It provides multiple choice questions and answers about Trautwein's seven major theories of M&A, including empire building theory, monopoly theory, and process theory. The questions also cover different types of synergies such as revenue-generating, cost-reduction, tax, operations, and manufacturing synergies. Empire building theory proposes that managers execute M&A to expand their own empires rather than create shareholder wealth.

Uploaded by

Youkayzee
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Mergers, Acquisitions and Corporate Restructuring

CHAPTER 4 MERGERS AND ACQUISITIONS MOTIVES AND SYNERGIES

Test Bank

Multiple Choice Questions


1. Trautwein has summarized seven major theories or motives of M&A. Which one is classified as beneficial to the managers of the acquired company (a) (b) (c) (d) 2. Monopoly theory Empire building theory Efficiency theory Process theory

In Trautwein view, the process theory explains merger to be (a) (b) (c) (d) An outcome of a process A microeconomic phenomenon A macroeconomic phenomenon Process theory

3.

In practice, monopoly theory works in which of the following ways (a) (b) (c) (d) Market leaders trying too consolidate their position Profitable and cash-rich companies trying to gain market leadership Market entry strategy All of the above

Mergers, Acquisitions and Corporate Restructuring

4.

Which of the following synergies do not come under the revenue-generating synergies (a) (b) (c) (d) Manufacturing synergy Operations synergy Financial synergy Marketing synergy

5.

Which of the following synergy involves merging a loss-making company with a profitable company can get tax benefits by writing off accumulated losses of the loss-making company against the profits of the profit-making company (a) (b) (c) (d) Tax synergy Financial synergy Operations synergy Marketing synergy

6.

Which theory tries to explain M&A as being planned and executed by managers for expanding their own empire, rather than creating wealth for shareholders (a) (b) (c) (d) Raider theory Empire-building theory Valuation theory Tax theory

7.

Which of the following is not one of the synergies (a) (b) (c) (d) Manufacturing synergy Operations synergy Fiscal synergy Ton synergy

8.

Which theory tries to explain M&A as being planned and executed by the managers for expanding their own empire rather than creating wealth for shareholders (a) (b) (c) (d) Empire-building theory Raider theory Valuation theory Monopoly theory

Mergers, Acquisitions and Corporate Restructuring

9.

The practice of gaining market leadership by profitable and cash-rich companies is a matter of discussion for (a) (b) (c) (d) Valuation theory Monopoly theory Empire-building theory Raider theory

10. Which of the following forms a group under cost-reduction synergies (a) Manufacturing and operations synergy (b) Tax and operations synergy (c) Operations and financial synergy (d) Tax and financial synergy 11. Which of the following statement is true (a) Cost reduction synergies are more difficult to achieve than Revenue generating synergies. (b) Monopoly theory is one of the six major theories of M&A summarized by Friedrich Trautwein (c) Revenue generating synergy can be described as the generation of much higher growth rate than the individual companies growth rates during independent operations. (d) Under the Raider theory profitable and cash rich companies try to gain market leadership.

Answers
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. b a d c a b c a b c

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