SPM 4013 PROGRAM EVALUATION AND
PERFORMANCE MONITORING QUESTION
BANK 2026
◉ How the Federal Trade Commission and SEC may get involved
Answer: FTC: Make sure competition is fair, check to see if mergers
are OP
SEC: Make sure investors get correct info
◉ M&A Disappointments
Answer: -overpayment
-poor integration
-no synergies
◉ M&A Wealth
Answer: - shareholders might get increased stock
-overall a more valuable firm
◉ Motives and Benefits of M&As
Answer: -obtain valuable resources to expand products
, -provide opportunities to attain synergy
-lead to consolidation and force other players to merge
-enter new market segments
-use of free cash flor
◉ Limitations
Answer: -takeover premiums are typicall high (could be inadequate
due diligence)
-competing firms can copy advantages or synergies
-managers make poor business decisions
-integration issues
◉ Acquiring the firm
Answer: -search for rare economies of scope
-limit information to other buyers
-limit information to the target
-avoid bidding wars
-close the deal quickly
-seek thinly traded markets
◉ Firm being acquired
Answer: -seek information from bidders
PERFORMANCE MONITORING QUESTION
BANK 2026
◉ How the Federal Trade Commission and SEC may get involved
Answer: FTC: Make sure competition is fair, check to see if mergers
are OP
SEC: Make sure investors get correct info
◉ M&A Disappointments
Answer: -overpayment
-poor integration
-no synergies
◉ M&A Wealth
Answer: - shareholders might get increased stock
-overall a more valuable firm
◉ Motives and Benefits of M&As
Answer: -obtain valuable resources to expand products
, -provide opportunities to attain synergy
-lead to consolidation and force other players to merge
-enter new market segments
-use of free cash flor
◉ Limitations
Answer: -takeover premiums are typicall high (could be inadequate
due diligence)
-competing firms can copy advantages or synergies
-managers make poor business decisions
-integration issues
◉ Acquiring the firm
Answer: -search for rare economies of scope
-limit information to other buyers
-limit information to the target
-avoid bidding wars
-close the deal quickly
-seek thinly traded markets
◉ Firm being acquired
Answer: -seek information from bidders
