Ch 3 Deck 3

Question 1

Options for types of sale process include

Answer 1

negotiated sale
targeted auction
broad auction

Question 2

Sell side marketing the transaction steps

Answer 2

1. prep and distro of teaser
2. prep and distro of (CIM)
3. prep and distro of Confidentiality Agreement
4. prep and distro of first round bidding procedures letter
5. prep management presentation
6. Set up data room
7. Prepare stapled financing

Question 3

document to market target sale to potential buyers

Answer 3

teaser

Question 4

Teaser contains

Answer 4

overview of sale
target’s business
financial history
sell-side IB’s contact info

Question 5

Regulation FD states that a teaser cannot contain

Answer 5

material non-public information

Question 6

CIM stands for

Answer 6

Confidential Information Memorandum

Question 7

CIM is also called

Answer 7

Confidential offering document

Question 8

A CIM includes information on target including

Answer 8

products
services
history
financial history
financial projections

Question 9

financial projections in a CIM cover the next

Answer 9

five years

Question 10

goal of a CIM is

Answer 10

to convince potential buyers of the benefits of the target corporation

Question 11

CIM includes very sensitive information and usually requires

Answer 11

a prior confidentiality agreement

Question 12

Length of CIM is typically

Answer 12

over 50 pages

Question 13

In addition to nondisclosure and hiring restrictions, a sell-side CA may ban bidders from

Answer 13

making offers on or buying the target’s shares

Question 14

gives specific instructions on the information that potential bidders must include in their indications of interest

Answer 14

First Round Bidding Procedures

Question 15

Indications of Interest are also called

Answer 15

First Round Bids

Question 16

First round bids must include:

Answer 16

• purchase price range
• assumptions which led to the purchase price
• form of consideration (cash or stock or mix)
• information on financing sources
• treatment of management and employees
• timing for completing a deal
• conditions to signing and closing
• Buyer contact information

Question 17

Sell-side management presentations are typically in the form of

Answer 17

slideshows with a handout that follows CIM structure

Question 18

Sell side management presentation includes

Answer 18

overview of corporation
place in the industry
its operations
its financials
time for questions and answers

Question 19

Sell side management presentation is led by

Answer 19

CEO
CFO
Other key officers

Question 20

secure physical room that contains the materials reviewed by buyers during the due diligence

Answer 20

data room

Question 21

Visits to the data room are scheduled and monitored by

Answer 21

sell side advisor

Question 22

Only one of these is allowed in data room at a time

Answer 22

bidding team

Question 23

Only these bidders are given access to the data room

Answer 23

second round bidders

Question 24

credit that is offered by the seller’s investment bank at a pre-determined rate as part of the offering

Answer 24

stapled financing

Question 25

Sell-side investment banks offer stapled financing to encourage buyers to

Answer 25

bid and to bid higher

Question 26

Are buyers required to use stapled financing?

Answer 26

No

Question 27

Sell-side investment banks see stapled financing as a way

Answer 27

set a floor price on company or asset
speed up the process
provide liquidity

Question 28

Sell side investment banks do not see stapled financing as a way

Answer 28

to make money. It is higher risk lending.