FIN302 – MERGERS AND ACQUISITIONS

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ASSIGNMENT

DRIVE	SPRING 2018
PROGRAM	MBA
SEMESTER	3
SUBJECT CODE & NAME	FIN302 – MERGERS AND ACQUISITIONS
BK ID	B1732
CREDITS	4
MARKS	30

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

SET I

Question. 1. Explanation for the basis for arriving at Fair Price.

Answer:Fair value is the sale price agreed upon by a willing buyer and seller, assuming both parties enter the transaction freely and knowledgeably. Many investments have a fair value determined by a market where the security is traded. Fair value also represents the value of a company’s assets and liabilities when a subsidiary company’s financial statements are consolidated with a parent company.

The most reliable way to determine an

Question. 2. List the goals of Merger. Explain the selection criteria

Answer:Mergers and acquisitions often create winners and losers at both the corporate and individual staff levels. One culture unseats another. One employee outweighs another. Power struggles prevail. And while policy and organizational decisions are made from above, the organization sits in limbo, slowly becoming disengaged from its focus. It is a hardly satisfactory state, since engaging across corporate cultures should be a near-

Question. 3. Explain Financial restructuring and Organizational restructuring. Explain their needs.

Answer:Corporate financial restructuring is any substantial change in a company’s financial structure, or ownership or control, or business portfolio, designed to increase the value of the firm.  If you want to increase the value of your firm, you may need to reorganize your financial assets in order to create the most financially beneficial environment for the company.

Financial difficulty can creep up on a company, only to be noticed when it’s almost too late. While running the day-to-day affairs, it’s easy to become busy

SET II

Question. 1. List and explain the various modes of Leveraged Buyouts (LBO) financing

Answer:Leveraged finance, particularly in the private equity world, came under scrutiny when it was used heavily in the 1980’s. While the disdain from many groups has not ebbed, there remains a very strong case for leveraged finance and many instances where it can be a useful and needed tool in sourcing appropriate financing. Here we discuss some of the most common forms of leveraged buyout financing, how each form works and what

Question. 2. Distinguish between Friendly and Hostile Takeover. Explain Reverse Takeover

Answer:A hostile takeover occurs when one corporation, the acquiring corporation, attempts to take over another corporation, the target corporation, without the agreement of the target corporation’s board of directors.

A friendly takeover occurs when one corporation acquires another with both boards of directors approving the transaction. Most takeovers are friendly, but

Question. 3. The financial analysis required in the case of a merger is the valuation of assets or stocks of the target company in which the acquirer contemplates to invest. Explain the basis of Valuation

Answer:A company can be separated into its operating businesses or assets and its non-operating assets. Operating assets are typically the principal sources of a company's revenues, cash flow, and income. The valuation of operating assets can be done using two different fundamental concepts: a liquidation value and a going concern value. Most of the analysis in investment banking and private equity contemplates valuing a business as a going concern, though liquidation valuation is used occasionally, especially when considering distressed

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