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Winter-2014
Master of Business Administration- MBA Semester 3
MF0011Mergers and Acquisitions-4 Credits
(Book ID: 1732)
Assignment (60 Marks)
Note: Answers for 10 marks questions should be approximately of 400
words. Each question is followed by evaluation scheme. Each Question
carries 10 marks 6 X 10=60.
Q1.Elaborate on the basic steps in organizing a merger and explain on
the five stage model of mergers and acquisitions.
Answer. Basic steps in organizing a merger
The evaluation and negotiation of a merger are a major business decision. Your
attorney, auditor, and banker are important sources of expertise and assistance.
Other outside resources include business consultants, regional cooperatives, and
university experts. Each merger situation is different, but
Q2.Synergy is the additional value that is generated by the combination
of two or more than two firms creating opportunities. Explain the role of
industry life cycle and pre requisites for creation of synergy.
Answer. Role of industry life cycle
The different stages of industry lifecycle are:
Fragmentation Stage: The first stage of the new industry is referred to as
fragmentation. In this stage, the new industry develops the business. The
entrepreneur plans on how to introduce new products or services into the market.
The twin problems of innovation and invention are overcome by the entrepreneur
at
Q3.Corporate restructuring is a broad based business initiative that
results in major change of size, ownership, control and/or management.

Write down the characteristics of corporate restructuring and explain

the types of corporate restructuring.
Answer. Corporate restructuring is one of the most complex and fundamental
phenomena that management confronts. Each company has two opposite
strategies from which to choose: to diversify or to refocus on its core business.
While diversifying represents the expansion of corporate activities, refocus
characterizes a concentration on its core business. From this perspective,
corporate restructuring is reduction in diversification.
Q4.Leveraged Buyouts (LBO) is a financing technique of purchasing a
private company with the help of borrowed or debt capital. Explain the
modes of LBO financing and governance aspects of LBOs.
Answer. A leveraged buyout (LBO) is an acquisition (usually of a company
but, can also be single assets such as a real estate property) where the purchase
price is financed through a combination of equity and debt and in which the cash
flows or assets of the target are used to secure and repay the debt. Since the
debt, be it senior or mezzanine, always has a lower cost of capital than the
equity, the
Q5.Joint Ventures (JV) have become an important strategic option for
many businesses. Give the meaning of JV with example. Explain the
characteristics of Joint Ventures. Also explain the Rationale for Joint
Ventures and alternatives to JVs as expansion strategy options with
example.
Answer. Meaning of JV with example
A joint venture (JV) is a business agreement in which parties agrees to develop,
for a finite time, a new entity and new assets by contributing equity. They
exercise control over the enterprise and consequently share revenues, expenses
and assets. There are other types of companies such as JV
Q6.Amalgamation
is
the
nature
of
merger
is
an
amalgamation/consolidation which satisfies/ meets the following
conditions. Explain the two methods of amalgamation. Explain the
treatment of Goodwill arising on Amalgamation and treatment of
reserves of amalgamation.
Answer. Methods of amalgamation
There are two main methods of accounting for amalgamations:
(a) The pooling of interests method; and
(b) The purchase method.
1. The use of

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