Deck 7: Mergers and Acquisitions

Question 1

Mergers and acquisitions (M&A) represent a corporate strategy to buy, sell, unite, or execute some other form of business transaction involving two or more existing companies in a manner that is either friendly (in agreement with the acquired company's agenda) or hostile (against the acquired company's agenda).

Answer 1

True

Question 2

A business merger is the product created when two or more companies agree to band together for strategic reasons.

Answer 2

True

Question 3

A business acquisition is the product created when one company purchases another company.

Answer 3

True

Question 4

A friendly takeover usually represents consent and approval by the takeover target for the purchasing company to acquire the target company.

Question 5

A hostile takeover usually represents non-consent and disapproval by the takeover target.

Question 6

M&A activity was very much alive and well in Canada during the period 2006 - 2008.

Question 7

Horizontal integration occurs when the hospitality enterprise acquires a target company that is usually found within its own competitive set and is currently servicing the market with a similar product or service.

Question 8

Vertical integration occurs when the hospitality enterprise purchases a complementary, supporting, or leading company that is currently integrated or will become integrated with the existing hospitality company.

Question 9

Conglomerate integration occurs when the purchasing company acquires a target company that does not have a direct or indirect relationship to the purchasing company.

Question 10

Synergy occurs when the total value of the business combination is greater than the individual values of the M&A transaction companies added together.

Question 11

An acquisition is:

A) a product of one company purchasing another
B) a product of one company dissolving itself to form a new company
C) a product of one company expanding into new markets
D) a product of one company banding together with another company

Question 12

A merger is:

A) a product of one company purchasing another
B) a product of one company dissolving itself to form a new company
C) a product of one company expanding into new markets
D) a product of one company banding together with another company

Question 13

An acquisition becomes hostile when:

A) the target takeover company is in favor of and approves the acquisition
B) the target takeover company is not in favor of and disapproves of the acquisition
C) the target takeover company discloses all financial information
D) the target takeover company expands operations into foreign markets

Question 14

A "White Knight" is:

A) a friendly suitor for the target takeover company
B) a friendly suitor for the pursuing takeover company
C) a friendly suitor for both the target and pursing takeover companies
D) a friendly suitor for the government in a corporate takeover attempt

Question 15

The most significant 2006 M&A transaction for the Canadian lodging industry was?

A) The acquisition of Fairmont Hotels and Resorts
B) The acquisition of Four Seasons Hotels and Resorts
C) The acquisition of CHIP REIT
D) The acquisition of Westmount Hospitality

Question 16

The most significant 2007 M&A transaction for the Canadian lodging industry was?

A) The acquisition of Fairmont Hotels and Resorts
B) The acquisition of Four Seasons Hotels and Resorts
C) The acquisition of CHIP REIT
D) The acquisition of Westmount Hospitality

Question 17

Synergy occurs when:

A) The whole is greater than the sum of the individual parts
B) Greater efficiencies and effectiveness is produced and benefits the firm
C) Economies of scale and leveraged resources add value to the firm
D) All of the above