Darryl Laws

 11.  When the target happens to be a closely-held (private) company, we determine the offer price in the following manner.

This question does not apply to my firm because we did not acquire any private company.

Applying industry price-to-earnings multiple to the earnings of the company to be acquired.

Applying industry enterprise multiples (TTM EBITDA x  value multiple) to the earnings of the company to be acquired.

Discounted cash flow approach combined with WACC.

We use the following method to determine the offer price for a closely-held company. (Please fill in.)

12.  During January 1, 2018 - December 31, 2019, our CEO lead the company acquisition transactions that ultimately did not increase shareholder value.

Yes

No

If the answer to #12 is “was no,” please skip to question #15. If the answer is “yes,” please continue.

13.  My firm was involved in the following type(s) of acquisition or merger. (Please check all that apply.)

100% all cash (internal) purchase

Combination of cash and stock structured purchase

Stock for stock exchange

14. (Please check all that apply.) The main motive(s) for my company’s acquisitions or mergers was (were) to:

increase product focus.

utilize out company’s managerial efficiency.

deploy internal capital on our balance sheet rather than securing bank financing.

achieve a specific organizational form.

reward the CEO for increasing the company’s shareholders’ value.

 

Part II. Please indicate the extent of your agreement or disagreement by checking the appropriate column. (SA = Strongly Agree, A = Agree, NAND = Neither Agree nor Disagree, D = Disagree, and SD = Strongly Disagree.)  

15.  Cash (or cash combined with stock exchange) payment for an acquisition requires a higher premium in M&A transactions than a straight stock for stock exchange transaction. ____ ____ ____    ____     ____

16.  Cash (or cash combined with stock exchange) requires a higher premium because of tax consequences to the shareholders of the acquired firm.  ____ ____  ____    ____     ____

17.  A hostile takeover often results in higher payment to the acquired company than a friendly merger. ____ ____ ____    ____     ____

18.  An acquisition in a related industry is worth more than an acquisition in a non-related industry. ____ ____ ____    ____     ____

19.  Did an asymmetrical information imbalance between the seller and buyer result in a higher price being paid for the company? 

 ____ ____ ____    ____     ____

20.  Is and equity analogous to a risk sharing agreement by which the true price paid in a merger is contingent upon the future profitability of the joint enterprise? ____ ____ ____    ____     ____

21.  Does a stock for stock purchase structure shift the burden of future returns to the combined companies?  ____ ____ ____    ____     ____

22.  Most of the gains from M&As usually accrue to shareholders of the acquired firm. ____ ____ ____    ____     ____

23.  Do buyers (PE fund managers and CEOs) willing to pay a higher premium for acquisitions underperform in their roles?  ____ ____ ____    ____     ____

24. Hubris on the part of the CEO explains why our firm over paid for the acquisitions our company made. ______ ______ ______ ______

25. Does a high premium paid for a target company suggest underperformance post- merger? _____ _____ _____ _____

Darryl Laws