Mergers and Acquisitions MCQ Questions and Answers for Practice

1. What is the main objective of a merger?

1. Increase market share
2. Reduce operational costs
3. Enhance product diversity
4. All of the above

2. What type of acquisition strategy involves the acquisition of companies in related industries?

1. Horizontal integration
2. Vertical integration
3. Conglomerate acquisition
4. Cross-border acquisition

3. In an acquisition, the acquiring company is known as the:

1. Target company
2. Bidder company
3. Acquirer company
4. Combined company

4. Which of the following is NOT a typical reason for mergers and acquisitions?

1. Expanding product portfolio
2. Achieving economies of scale
3. Reducing competition
4. Decreasing market share

5. What does due diligence in M&A typically involve?

1. Financial audit of the target
2. Market research of competitors
3. Regulatory compliance check
4. All of the above

6. Which of the following is a horizontal merger?

1. Two firms in the same industry combine
2. One firm acquires another in a different industry
3. Two firms in different regions combine
4. One firm buys a smaller firm

7. What is a "friendly" acquisition?

1. When both companies agree to the merger
2. When the acquirer forces the target company to sell
3. When the target company doesn't know about the acquisition
4. When the acquisition leads to layoffs

8. In a stock-for-stock acquisition, the acquiring company gives the target company:

1. Cash
2. Its own shares
3. A loan
4. Assets

9. What is "synergy" in the context of mergers and acquisitions?

1. Increased market competition
2. The combined value of the two companies being greater than the sum of their individual values
3. A reduction in the number of employees
4. A strategy to increase revenue per unit

10. Which of the following is an example of a vertical merger?

1. A retailer acquiring a supplier
2. Two banks merging
3. A technology firm acquiring a competitor
4. A pharmaceutical firm buying another pharmaceutical firm

11. What is the term for the price paid by an acquirer above the market value of a target's shares?

1. Synergy
2. Premium
3. Multiple
4. Discount

12. Which of the following is an example of a horizontal merger?

1. Two tech companies merging
2. A tech company merging with a retailer
3. A bank acquiring a competitor
4. A pharmaceutical company merging with a hospital

13. What is a leveraged buyout (LBO)?

1. A merger involving two large companies
2. A strategy where a company is bought using mostly debt
3. A company buying a competitor with equity
4. A financial strategy to liquidate a business

14. The due diligence process in an M&A transaction primarily aims to:

1. Estimate synergies
2. Assess the financial health
3. Ensure tax efficiency
4. Negotiate the price

15. Which type of merger involves companies from the same industry but different product lines?

1. Horizontal merger
2. Vertical merger
3. Conglomerate merger
4. Market extension merger