Mergers and Acquisitions Finance Flashcards
6 cards from real CPFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Mergers and Acquisitions Finance flashcards as text
Which M&A structure allows the acquirer to purchase specific assets or liabilities of the target rather than the entire entity?
Answer: Asset purchase
In an asset purchase, the acquirer selects specific assets and liabilities to acquire, leaving unwanted items with the seller.
An earn-out provision in an M&A deal is BEST described as:
Answer: A contingent payment tied to the target's future performance
An earn-out is a contingent payment where the seller receives additional consideration if the acquired business meets defined performance milestones.
The Hart-Scott-Rodino (HSR) Act requires pre-merger notification to the government when a transaction exceeds certain thresholds in order to:
Answer: Allow antitrust review before the deal closes
The HSR Act requires large M&A transactions to be reported to the FTC and DOJ for antitrust review before closing.
In M&A, a 'fairness opinion' is typically provided by:
Answer: An independent investment bank
A fairness opinion is issued by an independent investment bank stating that the transaction price is financially fair to shareholders.
Which ratio is MOST commonly used to compare acquisition valuations across M&A transactions in the same industry?
Answer: EV/EBITDA
EV/EBITDA is the standard M&A valuation multiple because it is capital-structure neutral and widely comparable across companies.
Post-merger integration (PMI) is considered critical to M&A success primarily because:
Answer: It is where synergies are actually realized or lost
PMI is the stage where promised synergies are executed; poor integration is the leading cause of M&A value destruction.