Series 79 – Investment Banking Representative Exam Mergers & Acquisitions Transactions 1

Question 1

In an M&A transaction, what is a 'fairness opinion'?

Accepted Answer

An independent assessment by a financial advisor that the deal price is fair

Answer

A fairness opinion is an independent financial analysis provided by an investment bank concluding that the consideration offered in an M&A transaction is fair from a financial point of view.

Question 2

Which merger structure allows the acquirer to purchase only selected assets and liabilities of the target company?

Accepted Answer

Asset acquisition

Answer

In an asset acquisition, the buyer selectively purchases specific assets and assumes only chosen liabilities, avoiding unwanted obligations of the target.

Question 3

What is a 'lock-up agreement' in the context of M&A?

Accepted Answer

A restriction on target management from soliciting other bids after signing

Answer

A lock-up agreement restricts the target company from soliciting or entertaining competing bids after a merger agreement has been signed, protecting the acquirer's deal.

Question 4

Under the Hart-Scott-Rodino (HSR) Act, when must parties notify the FTC and DOJ of a proposed merger?

Accepted Answer

When the transaction exceeds the applicable HSR threshold size-of-transaction test

Answer

The HSR Act requires pre-merger notification when a transaction meets both the size-of-transaction and size-of-person thresholds, triggering a mandatory waiting period.

Question 5

What does 'accretion/dilution analysis' measure in an M&A context?

Accepted Answer

The impact of an acquisition on the acquirer's earnings per share (EPS)

Answer

Accretion/dilution analysis evaluates whether an acquisition increases (accretive) or decreases (dilutive) the acquirer's pro forma earnings per share.

Series 79 – Investment Banking Representative Exam Practice Test

Series 79 – Investment Banking Representative Exam Practice Test

Series 79 – Investment Banking Representative Exam Mergers & Acquisitions Transactions 1