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ASSIGNMENT
DRIVE SPRING 2014
PROGRAM MBADS (SEM 3/SEM 5) MBAFLEX/ MBAN2 (SEM 3)
PGDFMN (SEM 1)
SUBJECT CODE & NAME MF0011 & MERGERS AND ACQUISITIONS
BK ID B1732
CREDITS 4
MARKS 60
Note: Answer all questions. Kindly note that answers for 10 marks questions should be
approximately of 400 words. Each question is followed by evaluation scheme.
Q.1 Elaborate on the basic steps in organizing a merger and explain on the five stage model of
mergers and acquisitions.
Ans: Explanation of basic steps in organizing a merger :
Step 1-Informal Discussion:
The first step of the process involves an informal discussion by the board of directors. The board
should consider the history of the cooperative, the present status, and, above all, what the
cooperative should do to survive, prosper, and meet members’ needs.
Step 2-The Merger Steering Committee:
Q.2 Synergy is the additional value that is generated by the combination of two or more than two
firms creating opportunities. Explain the role of industry life cycle and pre requisites for creation
of synergy.
Ans : Explanation of the role of industry life cycle :
Life cycle models are not just a phenomenon of the life sciences. Industries experience a similar cycle
of life. Just as a person is born, grows, matures, and eventually experiences decline and ultimately
death, so too do industries and product lines. The stages are the same for all industries, yet every
industry will experience these stages differently, they will last longer for some and pass quickly for

2. others. Even within the same industry, various firms may be at different life cycle stages. A firms
strategic plan is likely to be greatly influenced by the
Q.3 Corporate restructuring is a broad based business initiative that results in major change of
size, ownership, control and/or management. Write down the characteristics of corporate
restructuring and explain the types of corporate restructuring.
Ans : Characteristics of corporate restructuring :
1. To improve the company’s Balance sheet, (by selling unprofitable division from its core business).
2.To accomplish staff reduction ( by selling/closing of unprofitable portion)
3.Changes in corporate management.
4.Sale of underutilized assets, such as patents/brands.
5.Outsourcing of operations such as payroll and technical support to amore efficient 3rd party.
6.Moving of operations such as manufacturing to lower-cost
Q. 4 Leveraged Buyouts (LBO) is a financing technique of purchasing a private company with the
help of borrowed or debt capital. Explain the modes of LBO financing and governance aspects of
LBOs.
Ans : Explanation of modes of LBOs :
LBOs are typically used for three purposes, each in the category of corporate acquisitions generally.
These are 1) taking a public company private, 2) financing spin-offs, and 3) carrying out private
property transfers frequently related to ownership changes in small business.
Public to Private
The first situation arises when an investor (or investment group) buys all of the outstanding stock of
a publicly traded company and thus turns the company into a privately-held enterprise ("taking
private" in reverse of "going public").
Q. 5 Joint Ventures (JV) have become an important strategic option for many businesses. Give the
meaning of JV with example. Explain the characteristics of Joint Ventures. Also explain the
Rationale for Joint Ventures and alternatives to JV’s as expansion strategy options with example.
Ans : Meaning of JV with example :
A joint venture (JV) is a project or enterprise in which multiple companies or individuals invest.
Participants usually share equally in the project's direction and profits. A business arrangement in
which two or more parties agree to pool their resources for the purpose of accomplishing a specific
task. This task can be a new project or any other business activity.

3. Q. 6 Amalgamation is the nature of merger is an amalgamation/consolidation which satisfies/
meets the following conditions. Explain the two methods of amalgamation. Explain the treatment
of Goodwill arising on Amalgamation and treatment of reserves of amalgamation.
Ans : Explanation of two methods of amalgamation :
There are two main methods of accounting for amalgamations:
(a) the pooling of interests method; and
(b) the purchase method.
1. The Pooling of Interests Method :
Under the pooling of interests method, the assets, liabilities and reserves of the transferor company
are recorded by the transferee company at their existing carrying amounts. If, at the time of the
amalgamation, the transferor and the transferee companies
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