P2B.5 CORPORATE RESTRUCTURING

Question 1

Definition: Horizontal Mergers

Answer 1

Firms in this M&A are in same line of business

Question 2

Definition: Vertical Mergers

Answer 2

Firms in M&A are either their supplier or customer
For ex: A supplier firm merging with a customer who buys supplies from them

Question 3

Definition: Conglomerate

Answer 3

Firms in completely different businesses/industries merging

Question 4

Definition: Congeneric

Answer 4

Firms with related products/services merging together

Question 5

What’s the Purpose of a Leveraged Buyout?

Question 6

Equity Carve Out

Answer 6

parent turning a subsidiary into its own company (indept BoD and FS)

Question 7

Definition: Spin-off

Answer 7

Firm deals with undesirable unit by creating its own company and selling shares of it to shareholders

Question 8

Definition: Split-off

Answer 8

Firm splitting its operations into separate entities

Question 9

Why would a tracking stock be used?

Answer 9

When a firm feels like the division being sold would make the firm more valuable

Question 10

A qualifying reorganization is a _______ event for shareholders and corporations

Answer 10

Tax-free!!!

Question 11

A ____ _____ company is worth _____ than its parent company

Answer 11

spin-off, more

Question 12

List three characteristics of Greenmail

Answer 12

1. no longer existing but it was controversial and frequent in 1980s
2. greenmailer buys a whole bunch of stock to threaten takeover
3. this forces the firm having to buy its own shares from greenmailer at premium rate

Question 13

Definition: Crown jewel transfer

Answer 13

a hostile take over preventative measure by selling off best assets