Ch. 5 M&A

Question 1

T/F: When performing due diligence, if an IBR learns that a client is doing business in a country that’s on the OFAC list (e.g., Syria, Cuba), all transactions must be blocked and law enforcement must be notified within 10 business days.

Answer 1

True

Question 2

Is the sell-side banker interest in how the buyer will pay for the transaction?

Answer 2

Yes

Question 3

Who controls the data room - sell-side or buy-side banker?

Answer 3

Sell-side banker

Question 4

What banker coordinates the management presentations and site visits?

Answer 4

Sell-side banker

Question 5

To buy-side bankers interview large shareholders during the diligence process?

Answer 5

No

Question 6

Does a go-shop provision lead to a higher or lower price?

Answer 6

Higher price

Question 7

What ” refers to a payment that a seller owes a buyer in the event a deal falls through due to reasons
that are explicitly specified in the letter of intent or other merger documents?

Answer 7

Breakup Fee

Question 8

What is included to quantify the amount of compensation that the buyer will receive if the seller breaches the sales contract after the deal closes?

Answer 8

Indemnification Clause

Question 9

Is this the correct order in an M&A transaction of documents- Teaser, NDA, CIM, IOI, LOI, Definitive Agreement?

Answer 9

Yes

Question 10

Is a fairness opinion issued to value an IPO?

Answer 10

No

Question 11

Does a fairness opinion advise shareholders as to how to vote?

Answer 11

No

Question 12

What is most often used for M&A transactions in order to reduce the execution risk of the transactions?

Answer 12

Stapled Financing

Question 13

What occurs when a PE firm pays both itself and management a cash dividend by taking on additional debt of a previously purchased company?

Answer 13

Dividend Recapitalization