When conducting shareholder value at risk (SVAR)analysis for acquisitions,it is found that:
A) Acquirers using cash bear all of the risk of the acquisition, while the risk in acquisitions using share swaps is borne by both sets of shareholders.
B) Acquirers using stock swaps bear all of the risk of the acquisition, while the risk in acquisitions using cash is borne by both sets of shareholders.
C) The risk of an acquisition is always borne equally between the acquiring firm and target firm shareholders.
D) None of the above.

Question

Quizplus · Accepted Answer

In SVAR analysis for acquisitions, the risk is generally borne by the acquirer. In cash-based acquisitions, the acquirer bears all the risk as they are paying for the target company's shares. In share swap acquisitions, the risk is borne by both the acquirer and the target company shareholders, as the acquirer is giving their own shares as consideration instead of cash. Therefore, choice A is the correct answer.

When Conducting Shareholder Value at Risk (SVAR)analysis for Acquisitions,it Is