Deck 6: Sell-Side Ma

Question 1

Which of the buyers can limit the scope of their due diligence?

A)Financial sponsor
B)Strategic buyer
C)Direct competitor
D)They are all equal

Answer 1

C

Question 2

Which of the following buyers could potentially have limited access to the data room?

A)Direct competitor
B)Strategic buyer
C)Financial sponsor
D)All have equal access

Answer 2

A

Question 3

All of the following are disadvantages of which auction type?
$\bullet$ Potential to "leave money on the table"
$\bullet$ May afford buyers more leverage in negotiations
$\bullet$ Lesser degree of competition

A)Broad auction
B)Targeted auction
C)Negotiated sale
D)Silent auction

Answer 3

Targeted auction

Question 4

In which of the following scenarios would a sell-side advisor consider running a broad auction?

A)Seller is flexible regarding timing
B)Seller is flexible regarding potential business disruption
C)Confidentiality is not a priority
D)All of the above

Question 5

Which of the following is performed during the first stage of the auction process?

A)Prepare confidentiality agreement
B)Contact prospective buyers
C)Receive board approval
D)Conduct management presentation

Question 6

When evaluating strategic buyers, which of the following should be taken into consideration?

A)Financial capacity
B)Sector expertise
C)Investment strategy
D)Both A and B

Question 7

Which of the following may be an advantage of a pursuing a strategic buyer in the M&A process?

A)Less financing risk
B)Operating leverage
C)Ability to realize synergies
D)Both A and C

Question 8

Which of the following is performed during the final stage of the auction process?

A)Select winning bidder
B)Distribute final bid procedures letter and draft definitive agreement
C)Financing
D)Contact prospective buyers

Question 9

Which type of auction should be used when speed of execution is a priority?

A)Broad auction
B)Targeted auction
C)Negotiated sale
D)Both B and C

Question 10

The teaser and CIM are both part of the:

A)Financial exhibits
B)Marketing materials
C)Confidentiality agreement
D)Contract

Question 11

All of the following are deal considerations that sell-side advisors seek to achieve EXCEPT:

A)Value maximization
B)Speed of execution
C)Dilution
D)Certainty of completion

Question 12

Which of the following should be one of the first documents presented to a potential buyer?

A)Confidentiality agreement
B)Teaser
C)Bid procedures letter
D)None of the above

Question 13

Stapled financing is an):

A)Optimal financing structure
B)Customized financing structure
C)Pre-packaged financing structure
D)None of the above

Question 14

The confidentiality agreement includes provisions for all of the following EXCEPT:

A)Restrictions on financing
B)Standstill agreement
C)Permitted disclosure
D)Restrictions on clubbing

Question 15

All of the following are advantages of which auction type?
$\bullet$ Heightens competitive dynamics
$\bullet$ Limits potential buyers' negotiating leverage
$\bullet$ Reduces potential business disruption

A)Broad auction
B)Targeted auction
C)Negotiated sale
D)None of the above

Question 16

Key conditions to signing and closing are found on which of the following documents?

A)CIM
B)Bid procedure letter
C)Teaser
D)Confidentiality agreement

Question 17

In the M&A sales process, projected financial information can be found in which document?

A)10-K
B)8-K
C)CIM
D)424B3

Question 18

Which of the following criteria should be considered when evaluating a potential financial sponsor buyer?

A)Investment strategy
B)Fund size
C)Synergies
D)Both A and B

Question 19

What marks the formal launch of the bidding process?

A)Drafting the CIM
B)The confidentiality agreement
C)Contacting prospective buyers
D)Receiving initial bids

Question 20

A comprehensive set of information relevant to buyers can be found where?

A)Data room
B)CIM
C)Teaser
D)Confidentiality agreement

Question 21

Where is a data room typically set up?

A)In the target company's headquarters
B)Online
C)In Switzerland
D)In M&A advisor's headquarters

Question 22

All of the following are advantages of a negotiated sale EXCEPT:

A)High degree of confidentiality
B)Fastest timing
C)Less disruptive to the business
D)Potential to "leave money on the table"

Question 23

In an) __________, the target survives the transaction and may choose to either continue operations or dissolve after distributing the proceeds from the sale to its equity holders.

A)Asset sale
B)Stock sale
C)Fire sale
D)None of the above

Question 24

In an M&A transaction, when is a tender offer made to the public shareholders?

A)Stock sale
B)One-step transaction
C)Two-step tender process
D)Asset sale

Question 25

Who decides to approve or reject a transaction in a one-step merger transaction for a public company?

A)CEO
B)Board of directors
C)Target shareholders
D)CFO

Question 26

When is an issues list used in the M&A sale process?

A)After the potential buyer submits the revised definitive agreement
B)Before the seller send the revised definitive agreement
C)If the buyer does not want to submit a revised definitive agreement before it is informed it won the auction
D)At the beginning of the M&A sale process

Question 27

Which act requires that both parties in a large M&A transaction file notifications and report forms to the FTC and the DOJ?

A)Jones Act
B)Glass-Steagall Act
C)Sarbanes-Oxley Act
D)Hart-Scott-Rodino Act

Question 28

Which document has the purchase price details as well as the exact date and guidelines for an M&A process?

A)CIM
B)Bid procedures letter
C)Confidentiality agreement
D)Final bid procedures letter

Question 29

The target's board of directors typically requires __________ before making a recommendation on whether to accept the offer and approve the execution of a definitive agreement.

A)Additional due diligence
B)A fairness opinion
C)A sum of the parts analysis
D)All of the above

Question 30

What happens in a two-step tender process if the buyer fails to acquire enough of the target's shares within 20 business days?

A)The merger is "busted"
B)The buyer gets additional time
C)A shareholders meeting must be completed
D)None of the above

Question 31

In which type of sale process does a seller have the least leverage?

A)Negotiated sale
B)Stock sale
C)Targeted auction
D)Broad auction

Question 32

All of the following are valuation methodologies used by financial sponsors EXCEPT:

A)LBO model
B)Precedent transitions analysis
C)Comparable companies analysis
D)Accretion/dilution) analysis

Question 33

An) __________ is often initiated by the buyer.

A)Asset sale
B)Negotiated sale
C)Targeted auction
D)Broad auction