Question 1

Moeller, Schlingemann, and Stulz showed that the deals of the fifth merger wave destroyed significantly more value than those of the fourth merger wave.

Accepted Answer

Moeller, Schlingemann, and Stulz (2004) found that the wealth effects of mergers and acquisitions during the fifth merger wave (late 1990s to early 2000s) were significantly more negative for acquiring firms' shareholders compared to those in the fourth merger wave (mid-1980s to early 1990s), indicating a greater destruction of value in the fifth wave.

Question 2

Antitakeover defense became increasingly sophisticated during the following merger waves:
A) First
B) Second
C) Third
D) Fourth True or False Questions

Accepted Answer

During the third merger wave (1980s), antitakeover defenses became more sophisticated as companies developed strategies to fend off hostile takeovers.

Question 3

The first merger wave was significantly curtailed by the Sherman Antitrust Act.

Accepted Answer

False

Question 4

Which of the following types of deals were common in the first merger wave?
A) Horizontal
B) Vertical
C) Oligopolistic
D) None of the above
E) a, b, and c

Accepted Answer

The first merger wave, which occurred in the late 19th and early 20th centuries, was characterized by all three types of deals: horizontal (combining of companies in the same industry), vertical (combining of companies at different stages of production), and oligopolistic (leading to a market dominated by a small number of firms).

Question 5

Investment bankers played a prominent role in the first merger wave.

Accepted Answer

During the first merger wave in the late 19th and early 20th centuries, investment bankers played a crucial role by facilitating mergers and acquisitions, providing the necessary capital and financial advice to companies looking to expand through consolidation.

Question 6

Which of the following merger waves were truly global?
A) First
B) Second
C) Third
D) Fifth

Accepted Answer

The fifth merger wave, which occurred in the late 1990s, was truly global in nature, characterized by an increase in cross-border mergers and acquisitions. This wave was driven by globalization, technological advancements, and deregulation, allowing companies to expand their operations worldwide.

Question 7

In the 2000s, which of the following regions/nations exhibited a pattern of heightened M&A volume although the total level varied by the size of the economy?
A) Central and South America
B) Australia
C) Europe
D) All of these
E) None of the above

Accepted Answer

In the 2000s, all of the regions mentioned - Central and South America, Australia, and Europe - experienced an increase in M&A (Mergers and Acquisitions) activity. The volume of M&A transactions in these areas rose, although the total volume of activity varied depending on the size of the economy in each region.

Question 8

Mitchell and Mulherin, in investigating the deals of the fourth merger wave found that deregulation played a prominent role but that not all industries respond to deregulation the same way with some reacting more quickly than others.

Accepted Answer

Mitchell and Mulherin's research into the fourth merger wave indeed found that deregulation was a significant factor influencing mergers and acquisitions, but the impact varied across different industries, with some being quicker to respond to deregulatory changes than others.

Question 9

LBOs became increasingly popular during the fourth merger wave.

Accepted Answer

LBOs (leveraged buyouts) became popular during the fourth merger wave, which occurred in the 1980s. During this wave, there was a significant increase in the use of debt financing to acquire companies, and LBOs were one of the most common strategies used.

Question 10

The 1940s were a period of intense M&A activity.

Accepted Answer

The 1940s were marked by World War II and its aftermath, which led to a focus on reconstruction and recovery rather than mergers and acquisitions (M&A) activity. M&A activity was not a significant feature of the business landscape during this period.

Question 11

Roll-ups were not common in the 1990s but became more popular in the 2000s.

Accepted Answer

The answer of Roll-ups were not common in the 1990s...

Question 12

Investment bankers played a pivotal role in leading many of the deals that took place in the fourth merger wave.

Accepted Answer

Investment bankers were indeed pivotal in the fourth merger wave (1981-1989), as they provided the financial advice, strategic planning, and execution expertise necessary for the complex deals and leveraged buyouts that characterized this period.

Question 13

Which of the following companies can trace their origins to the first merger wave?
A) General Electric
B) Kodak
C) DuPont
D) a, b, and c
E) Both b and c

Accepted Answer

General Electric, Kodak, and DuPont can all trace their origins or significant development to the first merger wave that occurred in the late 19th and early 20th centuries. This period was characterized by the consolidation of many smaller companies into fewer, larger ones, often to create monopolies or oligopolies in various industries.

Question 14

The Inco-ESB deal was the first hostile takeover in the United States.

Accepted Answer

The Inco-ESB deal was not the first hostile takeover in the United States; hostile takeovers have a history dating back to the early 20th century, with notable earlier examples such as the battles for control of various companies during the 1901-1904 period.

Question 15

Which of the following types of deals were common in the third merger wave?
A) Horizontal
B) Vertical
C) Conglomerate
D) None of the above
E) a, b, and c

Accepted Answer

The third merger wave, occurring in the 1960s and 1970s, was characterized by conglomerate mergers, where companies in unrelated businesses combined to diversify and reduce risk.

Question 16

Which of the following factors contributed to the end of the third merger wave?
A) Stock market downturn
B) Economic slowdown
C) Antitrust enforcement
D) None of the above
E) a, b, and c

Accepted Answer

The end of the third merger wave was influenced by a combination of factors including a downturn in the stock market, an economic slowdown, and increased antitrust enforcement. These elements together created an environment that was less conducive to mergers and acquisitions, leading to the decline of the merger wave.

Question 17

Research has shown that the following factors contribute to the origination of merger waves:
A) Economic shocks
B) Regulatory shocks
C) Technological shocks
D) a, b, and c
E) Both b, and c

Accepted Answer

Merger waves can be triggered by various types of shocks including economic, regulatory, and technological. These shocks can alter the competitive landscape, create new opportunities, or necessitate strategic realignments, prompting firms to engage in mergers and acquisitions.

Question 18

Answer: The United Technologies takeover of Otis Elevator is an example of a failed merger.

Accepted Answer

The United Technologies takeover of Otis Elevator is not an example of a failed merger because Otis Elevator has been a part of United Technologies (now Raytheon Technologies after a merger with Raytheon) for many years, indicating a successful integration rather than a failure.

Quiz 2: History of Mergers

Moeller, Schlingemann, and Stulz showed that the deals of the fifth merger wave destroyed significantly more value than those of the fourth merger wave.

Antitakeover defense became increasingly sophisticated during the following merger waves:

The first merger wave was significantly curtailed by the Sherman Antitrust Act.

Which of the following types of deals were common in the first merger wave?

Investment bankers played a prominent role in the first merger wave.

Which of the following merger waves were truly global?

In the 2000s, which of the following regions/nations exhibited a pattern of heightened M&A volume although the total level varied by the size of the economy?

Mitchell and Mulherin, in investigating the deals of the fourth merger wave found that deregulation played a prominent role but that not all industries respond to deregulation the same way with some reacting more quickly than others.

LBOs became increasingly popular during the fourth merger wave.

The 1940s were a period of intense M&A activity.

Roll-ups were not common in the 1990s but became more popular in the 2000s.

Investment bankers played a pivotal role in leading many of the deals that took place in the fourth merger wave.

Which of the following companies can trace their origins to the first merger wave?

The Inco-ESB deal was the first hostile takeover in the United States.

Which of the following types of deals were common in the third merger wave?

Which of the following factors contributed to the end of the third merger wave?

Research has shown that the following factors contribute to the origination of merger waves:

Answer: The United Technologies takeover of Otis Elevator is an example of a failed merger.