Question 1

Idea lab is a combination of an incubator,a venture capitalist,and a business angel.

Accepted Answer

False

Question 2

Popular reasons to merge include protection,diversification and survival.

Accepted Answer

Protection, diversification, and survival are common reasons for companies to merge.

Question 3

Most ventures that are up for sale have good to very successful profit records.

Accepted Answer

Many ventures up for sale may not have successful profit records; they could be struggling, underperforming, or the owners might be selling for reasons unrelated to profitability, such as retirement or a desire to pursue other interests.

Question 4

Synergy is when the whole is the aggregate of all of its parts.

Accepted Answer

Synergy occurs when the whole is greater than the sum of its parts, not just an aggregate.

Question 5

One advantage to an acquisition is that there is an established customer base.

Accepted Answer

An acquisition typically involves purchasing an existing company, which often means acquiring their customer base along with their products, services, and brand recognition. This can be a major advantage for the acquiring company, as they can quickly expand their own customer base and potentially increase revenue.

Question 6

Synergy is defined as "the intangible benefits of mergers and acquisitions".

Accepted Answer

Synergy refers to the combined effect of two or more companies, where the total effect is greater than the sum of their individual effects, not just the intangible benefits of mergers and acquisitions.

Question 7

Lack of synergy is one of the most frequent causes of an acquisition's failure to meet its objectives.

Accepted Answer

Lack of synergy, or the inability of two companies to work effectively together and create greater value than they would separately, can lead to a variety of issues that can cause an acquisition to fail. These can include cultural clashes, conflicting strategies or goals, and operational challenges. Therefore, it is important for companies to carefully assess their compatibility and potential for synergy before pursuing an acquisition.

Question 8

The U.S.Department of Justice frequently issues guidelines for different types of mergers.

Accepted Answer

The U.S. Department of Justice (DOJ) does issue guidelines for different types of mergers, as part of their responsibility to enforce antitrust laws and ensure fair competition in the marketplace. These guidelines can provide key information for companies looking to merge and can help the DOJ determine whether a merger is likely to harm competition.

Question 9

To be successful the partners in a joint venture should have symmetry.

Accepted Answer

Symmetry between the partners in a joint venture refers to having balance and equality in terms of contributions, responsibilities, and benefits. This balance is crucial for the success of the joint venture.

Question 10

One disadvantage to an acquisition is that they are often a slow way to expand.

Accepted Answer

Acquisitions are often pursued for their ability to rapidly expand a company's footprint, market share, or capabilities, compared to organic growth strategies which typically take more time.

Question 11

When an entrepreneur bootstraps the purchase of a company,the entrepreneur usually puts down 10-20% in cash and then financing the remainder of the price with long-term debt paid back through the company's earnings.

Accepted Answer

This is a common strategy that many entrepreneurs use to purchase a company without needing to raise a large amount of capital upfront. By using long-term debt, they can finance the majority of the purchase price while still maintaining control of the company and using its earnings to pay off the debt over time. However, the exact percentage of cash down payment and financing may vary depending on the specific situation and negotiation.

Question 12

Brokers for acquisitions represent the buyer,not the seller.

Accepted Answer

Brokers for acquisitions can represent either the buyer or the seller, depending on who hires them. They act as intermediaries to facilitate the transaction for the party they represent.

Question 13

An acquisition is the purchase of a company,or part of a company,in which the acquired company ceases to exist independently.

Accepted Answer

In an acquisition, the acquired company becomes a part of the acquiring company and ceases to exist independently.

Question 14

Some acquisitions are motivated more by the CEO's ego than by the return on investment.

Accepted Answer

The answer of Some acquisitions are motivated more by the...

Question 15

The two most common means of acquisition are the entrepreneur's direct purchase of the firm's entire stock or assets or the bootstrap purchase of these assets.

Accepted Answer

The statement is true as the two most common means of acquisition are the entrepreneur's direct purchase of the firm's entire stock or assets or the bootstrap purchase of these assets.

Question 16

The most common type of joint venture is between two or more public sector companies.

Accepted Answer

The most common type of joint venture is actually between a public sector and a private sector company, rather than between two or more public sector companies.

Question 17

International joint ventures are decreasing in popularity.

Accepted Answer

International joint ventures are actually increasing in popularity as companies seek to expand their global reach, share risks, and access new markets and resources by partnering with local firms.

Question 18

When an entrepreneur bootstraps the purchase of a company,none of the price of the acquisition is cash.

Accepted Answer

Bootstrapping means starting or growing a business without external funding or investments, relying instead on the entrepreneur's own resources and revenue generated by the business. Therefore, if an entrepreneur bootstraps the purchase of a company, they would still need to pay for it with cash, even if they are not obtaining that cash from external sources.

Question 19

Often,when a business changes hands,key employees move into the acquiring company.

Accepted Answer

The answer of Often,when a business changes hands,key employees move...

Question 20

Cultural differences between international joint venture partners can create management difficulties.

Accepted Answer

Cultural differences in communication styles, decision-making processes, and work values can lead to misunderstandings and conflict, resulting in management difficulties in international joint ventures.

Quiz 14: Accessing Resources for Growth From External Sources