What is a leveraged buyout? It is a type of joint venture. It is an acquisition in which a large acquirer has leverage through bargaining power over a small target. It is an acquisition which is funded from a relatively large amount of debt. It is an acquisition which is funded from a relatively low amount of debt.

concept. A buyout is the acquisition of a controlling interest in a company Buyouts occur when a…

Answered: What is a leveraged buyout?…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter10: Long-lived Tangible And Intangible Assets

Section: Chapter Questions

Problem 12Q

See similar textbooks

Similar questions

If you are planning an acquisition that is motivated by trying to acquire expertise, you are basically seeking to gain intellectual capital. What concerns would you have in structuring the deal and the post-merger integration that would be different from the concerns you would have when buying physical capital?
In the process of determining fair value, the exit price refers to: Multiple Choice the amount the firm would receive if it sold a given asset. the amount the firm would pay if it bought an asset of the same type and condition as the one being valued. the sum of the future cash flows expected to be generated by continuing to use the asset. the expected sale price of the stock in a corporate buy-out.
a) What is a conglomerate merger and why are they more likely to be approved? b) Limit pricing is a strategy where a firm sets a low, but profitable, price to discourage entry. How does that differ from predatory pricing? c) What is "Share the gain, share the pain" theory?
Explain the mechanism of using financial leverage as a takeover defense tool
Because the cost of buying higher market share through acquisition may far exceed its revenue value, what factors should be considered by the company first.
Firms facing hostile takeovers often take actions to forestall the acquisition. For instance, a firm could borrow on terms that required immediate repayment if the firm is acquired or it could sell off undervalued assets to make itself a less desirable target. Such tactics are referred to as? Paul works for an investment bank in the corporate finance division. Along with the typical functions in his job role—such as finding a potential target company for a client which would add synergistic value to the client, finding a potential acquirer for a client, developing defensive tactics, establishing a fair value and financing operations—Paul also works with his team in conducting arbitrage operations. Based on your understanding of arbitrage operations complete the following sentence: In recent trade, Paul was assigned to buy 10% of a client’s shares from the open market at $45.50 per share and sell the shares at a price of $46.20 to a private investor, pocketing a return for his firm.…
Suppose your firm could purchase another firm for only half its replacement value.Would that be a sufficient justification for the acquisition? Explain.
What are the factors that determine whether the company should use cash acquisition or stock acquisition? Discuss five different defensive tactics that the target company can use to thwart this takeover attempt. 3) What are the possible cash flow benefits from this acquisition?
Securitization has its upside (primarily liquidity and diversification), but it has its downside as well. Which of the following are potential downsides to securitization? Choose the best answer. Select one: Tax-avoidance and regulatory-avoidance Non-transparency Agency costs All of the above
Acquirer shareholder returns may be explained by: Multiple Choice cost reductions from operational economies of scale. the over-confidence of acquirer managers in valuaing targets. agency cost reductions because of the takeover financing method of financing cost reductions from operational economies of scope. The benefits that arise from tax losses in the target.
It is quite often we observe some firms takeover target firms from a different industry. If diversifying harms firm value and it is more efficient to make diversification at the investor (shareholder) level than at the firm level, why do you think the managements still choose to make diversified acquisitions?
What are the financial effects of firm acquisitions?

SEE MORE QUESTIONS

Recommended textbooks for you

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

Auditing: A Risk Based-Approach (MindTap Course L…

Accounting

ISBN:

9781337619455

Author:

Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:

Cengage Learning

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

Auditing: A Risk Based-Approach (MindTap Course L…

Accounting

ISBN:

9781337619455

Author:

Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS

		It is a type of joint venture.
		It is an acquisition in which a large acquirer has leverage through bargaining power over a small target.
		It is an acquisition which is funded from a relatively large amount of debt.
		It is an acquisition which is funded from a relatively low amount of debt.