1. In a merger, the acquiring firm assumes all liabilities of the target firm. Assumed liabilities include all but one of the following?
a. Current liabilities
b. Long-term debt
c. Warranty claims
d. Depreciated operating equipment
e. Off-balance sheet liabilities
2. All of the following are true of buyer due diligence except for:
a. Due diligence is the process of validating assumptions underlying valuation
b. Can be eliminated and replaced by appropriate representations and warranties in the agreement of purchase and sale
c. A primary objective is to identify the sources and destroyers of value
d. Always consists of operational, financial, and legal reviews
e. Endeavors to identify the fatal flaws that could destroy the deal
3. Refining the target valuation based on new information uncovered during due diligence is most likely to affect which of the following:
a. Total consideration
b. The search process
c. The business plan
d. The acquisition plan
e. The target’s business plan
4. Closing is included in which of the following phases of the acquisition process?
a. Development of a business plan
b. Development of an acquisition plan
c. The search process
d. The negotiation process
e. None of the above
5. Integration planning is undertaken in which of the following acquisition activities?
a. Development of a business plan
b. The search process
c. Development of a financing plan
d. Post-closing integration activities
e. None of the above