Which of the following is NOT true of cross-border acquisitions?
global M&A activity declined in the first half of 2009.
they remain popular as a viable path to growth and strategic competitiveness.
global M&A activity grew in the first half of 2009.
there was a significant increase in cross-border activity during the 1990s.
Which of the following is NOT an attribute of a successful acquisition?
Investments in advertising and image building are made quickly.
The acquiring firm has a large amount of financial slack.
Innovation and R&D investments continue as part of the firm's strategy.
The acquired and acquiring firms have complementary assets and/or resources.
Which of the following statements is FALSE?
Private synergy is when the combination of two firms yields competencies and capabilities that could not be achieved by combining with any other firm.
Private synergy is more likely when the two firms in an acquisition have complementary assets.
Synergy resulting from an acquisition generates gains in shareholder wealth beyond what they could achieve through diversification of their own portfolios.
Private synergy is easy for the organization’s competitors to understand and imitate.
Which of the following can counteract the over-involvement of an organization in acquisitions?
making sure that there is no disagreement in the boardroom
allowing top executives to make all decisions about acquisitions
completing effective due-diligence processes around acquisitions
learning from mistakes and not having too much agreement in the boardroom
Which term describe the situation where the target firm does not solicit the acquiring firm’s bid?
a stealth raid.
a hostile takeover.
a leveraged buyout.
an adversarial acquisition.
A friendly acquisition
raises the price that has to be paid for a firm.
allows joint ventures to be developed.
enhances the complementarity of the two firms’ assets.
facilitates the integration of the acquired and acquiring firms.
Private synergy
is assessed by managers during the due diligence process.
is not easy for competitors to understand and imitate.
occurs in most related acquisitions resulting in increased returns.
is frequently achieved in conglomerates.
Internal product development is often perceived by managers as:
the only reliable method of generating new products for the firm.
critical to the success of biotech and pharmaceutical firms.
a quicker method of product launch than acquisition of another firm.
carrying a high risk of failure.
A leveraged buyout refers to
a restructuring action whereby a party buys all of the assets of a business, financed largely with debt, to take the firm private.
an action where the management of the firm and/or an external party buy all of the assets of a business financed largely with equity.
a firm pursuing its core competencies by seeking to build a top management team that comes from a similar background.
a firm restructuring itself by selling off unrelated units of the company’s portfolio.
Evidence suggests that firms using acquisitions as a substitute for internally developed innovations:
extend their time-to-market for new product launches.
leverage their core competencies across a broader range of products.
will eventually encounter performance problems.
offset the loss of research and development by competencies in other areas.