Mergers and Acquisitions

Question 1

What are the 4 strategies in an Acquisition?

Answer 1

Horizontal - buying up market share of competitors (geographic expansion)
Vertical - buying up suppliers, (solves chain issues)
Conglomerate - completely unrelated companies
Financial - private equity / venture capital funds

Question 2

Which of the M&A methods is the most commonly used in practice?

Answer 2

A friendly, agreed acquisition

Question 3

List the valid methods of a hostile takeover.

Answer 3

-Issuing ‘poison pill’ share warrants at a deeply discounted share price.
-Selling off parts of a business before the takeover process completes.
-Issuing golden parachutes to senior managers.
-Agreeing to a friendly takeover by a ‘white knight’ company.