Exploring Investment Banking Functions

What is the primary goal of Mergers and Acquisitions?

• To eliminate all debt of the acquiring company.

• To create value for shareholders through consolidation.

• To reduce competition in the market.

• To increase employee salaries across the board.

Name one common method used to value a company in M&A.

• Market Capitalization

• Discounted Cash Flow (DCF) analysis

• Asset-Based Valuation

• Comparable Company Analysis

What role do investment banks play in the M&A process?

• Investment banks act as advisors, valuators, and negotiators in the M&A process.

• Investment banks focus solely on post-merger integration.

• Investment banks are responsible for regulatory approvals in M&A.

• Investment banks only provide loans for M&A deals.

Define the term 'due diligence' in the context of M&A.

• A financial strategy for maximizing profits

• A method for negotiating M&A terms

• Due diligence is the investigation and evaluation of a target company in M&A to assess its financial, legal, and operational status.

• A legal requirement for all M&A transactions

What is the difference between a merger and an acquisition?

• A merger is when one company buys another, while an acquisition is a combination of two companies.

• A merger is a legal agreement to share resources, while an acquisition is a partnership between two companies.

• A merger involves a hostile takeover, whereas an acquisition is always friendly.

• A merger is a combination of two companies into one, while an acquisition is when one company buys another.

What are Equity Capital Markets primarily concerned with?

• Trading of real estate assets for profit.

• Issuance of debt securities to raise funds.

• Issuance and trading of equity securities to raise capital.

• Management of corporate mergers and acquisitions.

How do initial public offerings (IPOs) relate to Equity Capital Markets?

• IPOs do not involve public investors in the Equity Capital Markets.

• IPOs are only for private investors in Equity Capital Markets.

• IPOs are the process by which companies raise equity capital from public investors in Equity Capital Markets.

• IPOs are a method for companies to reduce their equity capital.

What is the role of an underwriter in an IPO?

• To conduct the company's financial audits

• The role of an underwriter in an IPO is to facilitate the issuance of shares by pricing, buying, and selling them to the public.

• To provide legal advice to the company

• To manage the company's marketing strategy

What are Debt Capital Markets focused on?

• Debt Capital Markets are primarily concerned with real estate investments.

• Debt Capital Markets deal exclusively with commodities trading.

• Debt Capital Markets are focused on the issuance and trading of debt securities.

• Debt Capital Markets focus on equity financing.

What is a hostile takeover?

• A hostile takeover is a type of merger that requires government approval.

• A hostile takeover is when a company merges with another company voluntarily.

• A hostile takeover is a friendly acquisition where both companies agree on terms.

• A hostile takeover occurs when a company attempts to acquire another company against the wishes of the target company's management.