Corporate Finance

1.a) FALSE In offensive takeovers the acquiring family pays for stocks at a premium price, sh atomic number 18holders usually see an immediate acquire when their corporation is the target of an acquisition. Conversely, the acquiring familiarity often incurs debt to make their bid, or pays well above market value for the target conjunctions stocks. This drops the value of the bidder, usually resulting in lower share set for stockholders of that family. Hostile takeovers often have an overall harmful strength on the economy, in part because they often fail. When one fraternity takes over another, worry may not understand the technology, the championship model politics of the new company. The debt created by takeovers arouse sluggish growth, and consolidation often results in layoffs. Another cost of hostile takeovers is the effort and money that companies put into their takeover defense strategies. incessant fear of takeover bear hinder growth and mute innovation, as well as generating fears among employees about job security. all told in all, it is the shareholders of the target of the acquisition that usually benefit the approximately from hostile takeovers. Friendly takeovers are usually more wide-eyed and incur fewer costs to the counterparts. They also usually benefit the targets shareholders more.

b) FALSE Mergers can add value to the company if they generate some competitive edge other firms cant match and the target firms management cant reach on their own. If these economic gains are larger than the cost of the merger (e.g the premiums paid for the targets stock) the merger does add value and the merger is worth to do and it should go through. 2.a) A company with abundant cash reserves. Acquirers may take to spend this reserve cash in advantageous investment projects. b) A company with a subsidiary. If the subsidiary can be sold without major risk to the target companys cash flows, this is better than buying a company with no easily-sold subsidiaries. c) A firm with little part of... If you want to get a full essay, order it on our website: Orderessay

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