Question

Assignment requirements

Presentation in PowerPoint format (minimum 10 slides). Write a 6 to 8 page paper in which you respond to the questions below and provide true/ false replies for all questions (with supporting rationale) and additional requested information for 1a, 1c and 1e.

Your assignment must follow these formatting requirements:

• Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format
• Include a cover page containing the title of the assignment, the student's name, the professor's name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

1a. True/ False - On average, acquisitions destroy shareholder value

Identify a corporate acquistion (within the last 10 years) which added value to the acquiring company and discuss a minimum of three (3) key factors which enabled their success?

1b. True/ False - A discounted cash flow valuation of a target company discounts the target's estimated free cash flows at the acquirer's cost of capital

1c. True/ False - An acquirer should be willing to pay a higher control premium for a well managed company than a poorly managed one

Why is control considered so valuable? Identify a company which paid-up for a controlling interest and assess why it was done?

1d. True/ False - The liquidation value of a company's shares always places a floor under its stock price

1e. True/ False - An unusually low stock price in management's eyes encourages management to take the company private in a management buyout

Identify an instance where management took a company private based on a low stock price valuation? Did the company remain private, and if so, why did it remain in private hands?

Answer 1

1a. False. Recent studies have shown that acquisitions add to the value of stockholders.

1b. False. It discounts at the targets cost of capital

1c. False. Since it is already running well, the premium paid must not be high.

1d. False. It can be higher if the liquidators decide to continue the business.

1e. True.