Corporate Finance Transactions

Question 1

What are forms of expansion and divestiture

Answer 1

Mergers
Acquisitions
Strategic Alliances
Joint Ventures - joint control by 2+ ventures
Spin offs - a new company created from the existing company but mgmt and operations are separate though shareholders are the same

Question 2

What are 4 transaction considerations

Answer 2

Anti-competition risk
Estimating Synergies
Valuation
Payment method

Question 3

What is the anti-competition risk?

Answer 3

Might be denied by regulatory bodies due to reduced level of competition creates a detriment to general consumers

Question 4

What are the 5 key risks in corporate finance

Answer 4

Growth and increased market power
Diversification 
Tax
Form of acquisition 
Manager incentives

Question 5

What are synergies involved in combination with ethics

Answer 5

idea is combined entities are worth more than independently
Revenue may increase cux
increased market shares
Raised pricing due to reduced competition
Ability to cross sell products

Costs may decrease due to increase efficiency and economies of scale

Question 6

What are 4 international considerations of corporate finance

Answer 6

1. International sources of capital
2. Exchange rate risks
3. Economic Risk
4. Political Risk