Mergers Acquisitions And Other Restructuring Activities 7th Edition By Donald DePamphilis – Test Bank

True/False Questions: Answer True or False to the following questions:

1. Deal structuring is fundamentally about satisfying as many of the primary objectives of the parties involved and deciding how risk will be shared. True or False
Answer: True

2. The acquisition vehicle is the legal structure used to acquire the target. True or False
Answer: True

3. Such legal structures as holding company, joint venture, and limited liability corporations are suitable only for acquisition vehicles but not post closing organizations. True or False
Answer: False

4. Employee stock ownership plans cannot be legally used to acquire companies. True or False
Answer: False

5. Form of payment refers only to the acquirer’s common stock used to make up the purchase price paid to target shareholders. True or False
Answer: False

6. The appropriate deal structure is that which satisfies, without regard to risk, as many of the primary objectives of the parties involved as necessary to reach overall agreement. True or False
Answer: False

7. Form of payment may consist of something other than cash, stock, or debt such as tangible and intangible assets.
True or False
Answer: True

8. If the form of acquisition is a statutory merger, the seller retains all known, unknown or contingent liabilities.
True or False
Answer: False

9. The form of payment does not affect whether a transaction is taxable to the seller’s shareholders. True or False
Answer: False

10. The assumption of seller liabilities by the buyer in a merger may induce the seller to demand a higher selling price. True or False
Answer: False

11. The acquirer may reduce the total cost of an acquisition by deferring some portion of the purchase price. True or False
Answer: True

12. A holding company structure is the preferred post-closing organization if the acquiring firm is interested in integrating the target firm immediately following acquisition. True or False
Answer: False

13. The acquired company should be fully integrated into the acquiring company if an earn-out is used to consummate the transaction. True or False
Answer: False