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Question
How is the equity value calculated for an M&A transaction when the target company is private?
A. Share price multiplied by shares outstanding
B. Acquirers price per share multiplied by shares outstanding
C. Enterprise value less assumed/refinanced net debt
D. There is no equity value for a private company
Answer
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Related questions
Q:
What happens to WAAC as the proportion of debt in a capital structure increases?
A. It stays the same
B. It decreases
C. It increases
D. It depends
Q:
How does a decrease net working capital affect FCF?
A. Overstates FCF
B. Does not affect FCF
C. Understates FCF
D. It depends
Q:
Which of the following is considered a use of cash?
A. Amortization
B. Depreciation
C. Decrease in net working capital
D. Increase in net working capital
Q:
Which kind of buyer generally pays the most for an acquisition?
A. Financial buyer
B. Strategic buyer
C. Private equity
D. Financial sponsor
Q:
Given the following information, calculate the EBITDA multiple that includes synergies.
Details:
Enterprise Value: $3,500.0
EBIT: $425.0
Depreciation and Amortization: $25.0
COGS: $500.0
Synergies: $50.0
A. 3.5x
B. 8x
C. 14x
D. 7x
Q:
Calculate the percentage of premium paid given the following details:
Details:
Although rumors of the transaction leaked out yesterday, AcquirerCo officially announced today that it has agreed to buy TargetCo for $25.00 a share. TargetCo shares closed higher yesterday at $20.00.
A. 25%
B. 20%
C. 15%
D. Not enough information
Q:
Calculate the offer price per share given the following details:
Transaction Details:
AcquirerCo agreed to buy TargetCo with a mix of cash and AcquirerCo stock. TargetCo stockholders will receive $5.00 in cash and one share of AcquirerCo common stock for every two shares of TargetCo stock. AcquirerCos share price closed at $30.00 a day prior to the announcement.
A. $15.00
B. $35.00
C. $25.00
D. $20.00
Q:
Determine the type of exchange ratio in the following Stock-for-Stock transaction.
Transaction Details:
AcquirerCo will acquire TargetCo for stock. TargetCo stockholders will receive $40.00 of AcquirerCos common stock for each share of TargetCo common stock they hold.
A. Fixed exchange ratio
B. Secure exchange ratio
C. Floating exchange ratio
D. Linear exchange ratio
Q:
Calculate the equity value in a fixed exchange ratio structure given the following information.
Transaction Details:
TargetCos shareholders will receive one share of AcquirerCos common stock for every four shares of TargetCos common stock. AcquirerCos share price prior to the announcement was $20.00. TargetCo has 25 million shares outstanding.
A. $125.0mm
B. $100.0mm
C. $80.0mm
D. $50.0mm
Q:
Calculate the fixed exchange ratio based on the following transaction details.
Transaction Details:
AcquirerCo agrees to purchase TargetCo in an all-stock transaction valued at $2.0 billion. TargetCos shareholders will receive one share of AcquirerCos stock for every four shares of TargetCo stock they own.
A. 4
B. .25
C. 1.00
D. .5
Q:
When may a Schedule 13E-3 be issued?
A. In a tender offer
B. In a one-step merger transaction
C. When a public acquirer issues shares as part of the purchase consideration of a public target
D. In a leveraged buyout of a public company
Q:
What is the correct order for a precedent transaction analysis?
E. Select the universe of comparable acquisitions
F. Benchmark the comparable acquisitions
G. Locate the necessary deal-related and financial information
H. Spread key statistics, ratios, and transaction multiples
I. Determine valuation
A. E, H, F, G, I
B. E, G, H, F, I
C. I, H, G, E, F
D. F, G, H, I, E
Q:
Calculate COGS given the following information.
Sales: $800.0m
SG&A: $250.0m
EBITDA: $300.0m
D&A: $50.0m
A. $250.0m
B. $200.0m
C. $500.0m
D. $300.0m
Q:
What is a common multiple to use in a comparable companies analysis for a retail company?
A. EV / Subscribers
B. EV / Reserves
C. EV / Square footage
D. EV / Production
Q:
A companys capital expenditures can be found on all of the following forms EXCEPT:
A. 10-K
B. 8-K
C. Proxy Statement
D. 10-Q
Q:
All of the following are reasons why comparable companies analysis should be used in conjunction with other valuation methodologies EXCEPT:
I. Markets may be skewed due to investor sentiment
II. No two companies are the same
III. Valuation methods vary by sector
IV. Intrinsic valuation may be needed
A. Markets may be skewed due to investor sentiment
B. No two companies are the same
C. Valuation methods may vary by sector
D. Intrinsic valuation may be needed
Q:
When building a pre-LBO model, a banker builds the cash flow statement through what point?
A. Operating activities
B. Financing activities
C. Investing activities
D. The cash flow statement is not built in the pre-LBO model
Q:
Which of the following do/does not require a set amortization schedule?
A. Revolving credit facility
B. Term loan A
C. Term loan B
D. Senior notes
Q:
In a pre-LBO model, net income on the first line of the cash flow statement is initially:
A. Inflated
B. Understated
C. Correct
D. Deflated
Q:
In a pre-LBO model, what is the new line item financing fees under?
A. Long-term liabilities
B. Long-term assets
C. Short-term liabilities
D. Short-term assets
Q:
Which exit strategy provides the sponsor with the ability to retain 100% of its existing ownership position in the target?
A. Sale to a strategic buyer
B. IPO
C. Dividend recapitalization
D. Private sale
Q:
If an LBO target does not repay any debt during the investment horizon, how can the sponsor still realize a return?
A. If the target reinvests its cash into the business, the sponsor can realize a return by selling the target at a higher enterprise value
B. The sponsor cannot realize a return, as the enterprise value did not increase
C. The sponsor cannot realize a return, as the value of the sponsors equity could not increase
D. It depends on the sponsors internal rate of return
Q:
What is the annual interest rate paid on a debt obligations principal amount outstanding called?
A. Covenant
B. Coupon
C. Call premium
D. PIK
Q:
What is the classification of a covenant that limits the amount of debt the borrower can have outstanding?
A. Affirmative
B. Negative
C. Maintenance
D. Financial
Q:
What kind of loan is needed if the take-out securities deteriorate between the signing and the closing of an LBO?
A. Bridge loan
B. Second lien term loan
C. PIK
D. Mezzanine debt
Q:
Which of the following correctly ranks the capital structure hierarchy?
A. High yield bonds, mezzanine debt, equity contribution, bank debt
B. Equity contribution, mezzanine debt, high yield bonds, bank debt
C. Equity contribution, high yield bonds, mezzanine debt, bank debt
D. Bank debt, mezzanine debt, high yield bonds, equity contribution
Q:
A target was purchased for $1,500.0m with an equity contribution of $500.0m, and by year 5 $500.0m of cash flow was used to repay debt. Assuming the sponsor sells the target for the enterprise value, what is the value of the sponsors equity?
A. $1,500.0m
B. $1,000.0m
C. $500.0m
D. $2,000.0m
Q:
What is another name for a limited partnership structured as a fixed-life investment vehicle?
A. General partnership
B. Blind pool
C. Passive investment
D. SPAC
Q:
Calculate the terminal value using the EMM method given the following information. A. 8,400.0m
B. 8.160.0m
C. 8,000.0m
D. 8,480.0m
Q:
Calculate the CAPM given the following information.A. 12%B. 16%C. 20%D. 8.32%