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).

Accepted Answer

Mergers and acquisitions (M&A) indeed involve strategies where companies buy, sell, or combine their businesses. These transactions can be friendly, aligning with the goals of the company being acquired, or hostile, proceeding without the consent or against the preferences of the target company's management.

Question 2

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

Accepted Answer

A business merger occurs when two or more companies combine to form a single entity, often for strategic benefits such as increased market share or cost efficiencies.

Question 3

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

Accepted Answer

A business acquisition occurs when one company purchases another, resulting in the acquired company becoming part of the purchasing company.

Question 4

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

Accepted Answer

In a friendly takeover, the management of the target company agrees to the acquisition and recommends that the shareholders approve the deal, indicating consent and approval for the takeover.

Question 5

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

Accepted Answer

In a hostile takeover, the acquiring company seeks to take over the target company without the consent or cooperation of the target company's management, often against their wishes.

Question 6

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

Accepted Answer

During the period 2006-2008, Canada experienced a significant amount of mergers and acquisitions (M&A) activity, driven by strong economic conditions, high commodity prices, and the availability of financing.

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.

Accepted Answer

Horizontal integration in the hospitality industry involves acquiring or merging with a company that operates in the same segment of the industry, offering similar products or services, thereby expanding the enterprise's market share and reducing competition.

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.

Accepted Answer

Vertical integration in the hospitality industry involves acquiring or merging with companies at different stages of production or distribution within the same industry, such as a hotel chain purchasing a tour operator or a food supplier, to create a more comprehensive service offering or to streamline operations.

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.

Accepted Answer

Conglomerate integration refers to the acquisition of a company that operates in a completely different industry or market than the purchasing company, indicating no direct or indirect business relationship between the two.

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.

Accepted Answer

Synergy in a business context refers to the concept that the combined value and performance of two companies will be greater than the sum of the separate individual parts, due to efficiencies gained from the merger or acquisition.

Question 11

An acquisition is:

Accepted Answer

An acquisition occurs when one company purchases another company, effectively making the acquired company a part of the purchasing entity. This does not necessarily involve dissolving the acquired company, expanding into new markets, or forming a partnership between companies.

Question 12

A merger is:

Accepted Answer

The answer of A merger is:
...

Question 13

An acquisition becomes hostile when:

Accepted Answer

A hostile acquisition occurs when the acquiring company attempts to take over a target company against the wishes of the target company's management and board of directors. This is in contrast to a friendly acquisition, where the target company approves of the acquisition.

Question 14

A "White Knight" is:

Accepted Answer

A "White Knight" is a friendly suitor for the target takeover company, often sought after to avoid a hostile takeover by another firm.

Question 15

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

Accepted Answer

The most significant 2006 M&A transaction for the Canadian lodging industry was the acquisition of Fairmont Hotels and Resorts. This deal was notable for its size and the impact it had on the Canadian hotel landscape.

Question 16

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

Accepted Answer

The most significant 2007 M&A transaction for the Canadian lodging industry was the acquisition of Four Seasons Hotels and Resorts. This transaction was notable due to the size of the deal and the global prestige of the Four Seasons brand.

Question 17

Synergy occurs when:

Accepted Answer

Synergy occurs when multiple elements (such as resources, processes, or organizations) come together to create an outcome that is greater than the sum of their individual effects. This can manifest through increased efficiencies, effectiveness, economies of scale, and leveraged resources, all of which add value to the firm. Therefore, all the options (A, B, and C) collectively describe the concept of synergy.

Quiz 7: Mergers and Acquisitions