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Mergers and Acquisition Of Companies Interview Questions & Answers - Learning Mode

Mergers and Acquisition Of Companies Interview Questions & Answers - Learning Mode

Mergers and acquisitions are transactions in which the ownership of companies,other business organizations or their operating units are transferred or combined. As an aspect of strategic management, M&A can allow enterprises to grow, shrink, change the nature of their business or improve their competitive position.? From a legal point of view, a merger is a legal consolidation of two entities into one entity, whereas an acquisition occurs when one entity takes ownership of another entity's stock , equity interests or assets .

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Mergers and Acquisition Of Companies Interview Questions & Answers - Learning Mode
Try Mergers and Acquisition Of Companies Interview Questions & Answers - Exam Mode
Question: Explain briefly the methods of calculating purchase consideration.

Answer: a) Lump Sum Method: - Purchase consideration = Fixed sum agreed to be paid by the Transferee to the transferor company.
b)Net asset method: - Purchase consideration = Net worth of the assets (Agreed value of entire asset ? Agreed value of liabilities), taken over by the transferee company.
c)Net payment method: - Purchase consideration= All the payments made by the transferee company to the shareholders of the transferor company in the form of cash,shares or debentures.
d)Intrinsic valu Source:
Question: What are the disadvantages of amalgamation?

Answer: a)Amalgamation may lead to elimination of healthy competition.
b)Reduction of employees may take place.
c)There could be additional debt to pay.
d)Business combination could lead to monopoly in the market, which is not always positive.
e)The goodwill and identity of the old company is lost.
Question: What is the difference between merger and acquisition?

Answer: Mergers is the combination of two companies to form one, while Acquisitions is one company taken over by the other.

Question: What is a tranferor company?

Answer: Transferor Company means the company which is amalgamated into another company. Source:
Question: What are amalgated companies?

Answer: Amalgamated company is a newly formed union (alliance) of two or more amalgamating companies. It has a separate legal existence with a new unique name.
Question: What is a transferee company?

Answer: Transferee Company means the company into which the transferor company is amalgamated. Source:
Question: What is merger?

Answer: A merger is a deal to unite two existing companies into one new company. Source:
Question: Explain accounting of amalgamation.

Answer: a)Pooling of Interests Method:Through this accounting method, the assets, liabilities and reserves of the transferor company are recorded by the transferee company at their existing carrying amounts.
b)Purchase Method:In this method, the transferee company accounts for the amalgamation either by incorporating the assets and liabilities at their existing carrying amounts or by allocating the consideration to individual assets and liabilities of the transferor company on the basis of their fair Source:
Question: What are the advantages of amalgamation?

Answer: a)Competition between the companies gets eliminated
b)R&D facilities are increased
c)Operating cost can be reduced
d)Stability in the prices of the goods is maintained.
Question: What are amalgating companies?

Answer: Amalgamating companies are those two or more companies which willingly unite (combine) to carry on their business activities jointly.
Question: Why Amalgamate?

Answer: a) To acquire cash resources
b)Eliminate competition
c)Tax savings
d)Economies of large scale operations
e)Increase shareholders value
f)To reduce the degree of risk by diversification
g)Managerial effectiveness
h)To achieve growth and gain financially Source:
Question: Explain the types of Amalgamation?

Answer: a) Amalgamation in the nature of merger:In this type of amalgamation, not only is the pooling of assets and liabilities is done but also of the shareholders? interests and the businesses of these companies. In other words, all assets and liabilities of the transferor company become that of the transferee company. In this case, the business of the transferor company is intended to be carried on after the amalgamation.
b) Amalgamation in the nature of purchase:This method is considered when th Source:
Question: How is Amalgamation different from a Merger?

Answer: Amalgamation is different from Merger because neither of the two companies under reference exists as a legal entity. Through the process of amalgamation a completely new entity is formed to have combined assets and liabilities of both the companies.
Question: What is an acquisition?

Answer: An acquisition is a corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own. Acquisitions are often paid in cash, the acquiring company's stock or a combination of both.
Question: What is amalgamation?

Answer: Amalgamation is an agreement (deal) between two or more companies to consolidate (strengthen) their business activities by establishing a new company having a separate legal existence." Source:
Question: What is purchase consideration?

Answer: In case of Amalgamation, Purchase consideration is the price which is paid by the purchasing company (Transferee Company) for the purchase of business of the Vendor Company (Transferor Company).
Purchase consideration = shares & other securities issued + Cash Payment +other assets by the transferee company to the shareholders of the transferor company.


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Latest 20 Questions
Payment of time- barred debt is: (a) Valid (b) Void (c) Illegal (d) Voidable
Consideration is defined in the Indian Contract Act,1872 in: (a) Section 2(f) (b) Section 2(e) (c) Section 2(g) (d) Section 2(d)
Which of the following is not an exception to the rule, "No consideration, No contract": (a) Natural love and affection (b) Compensation for involuntary services (c) Completed gift (d) Agency
Consideration must move at the desire of: (a) The promisor (b) The promisee (c) The promisor or any other party (d) Both the promisor and the promisee
An offer which is open for acceptance over a period of time is: (a) Cross Offer (b) Counter Offer (c) Standing Offer (d) Implied Offer
Specific offer can be communicated to__________ (a) All the parties of contract (b) General public in universe (c) Specific person (d) None of the above
_________ amounts to rejection of the original offer. (a) Cross offer (b) Special offer (c) Standing offer (d) Counter offer
A advertises to sell his old car by advertising in a newspaper. This offer is caleed: (a) General Offer (b) Special Offer (c) Continuing Offer (d) None of the above
In case a counter offer is made, the original offer stands: (a) Rejected (b) Accepted automatically (c) Accepted subject to certain modifications and variations (d) None of the above
In case of unenforceable contract having some technical defect, parties (a) Can sue upon it (b) Cannot sue upon it (c) Should consider it to be illegal (d) None of the above
If entire specified goods is perished before entering into contract of sale, the contract is (a) Valid (b) Void (c) Voidable (d) Cancelled
______________ contracts are also caled contracts with executed consideration. (a) Unilateral (b) Completed (c) Bilateral (d) Executory
A offers B to supply books @ Rs 100 each but B accepts the same with condition of 10% discount. This is a case of (a) Counter Offer (b) Cross Offer (c) Specific Offer (d) General Offer
_____________ is a game of chance. (a) Conditional Contract (b) Contingent Contract (c) Wagering Contract (d) Quasi Contract
There is no binding contract in case of _______ as one's offer cannot be constructed as acceptance (a) Cross Offer (b) Standing Offer (c) Counter Offer (d) Special Offer
An offer is made with an intention to have negotiation from other party. This type of offer is: (a) Invitation to offer (b) Valid offer (c) Voidable (d) None of the above
When an offer is made to the world at large, it is ____________ offer. (a) Counter (b) Special (c) General (d) None of the above
Implied contract even if not in writing or express words is perfectly _______________ if all the conditions are satisfied:- (a) Void (b) Voidable (c) Valid (d) Illegal
A specific offer can be accepted by ___________. (a) Any person (b) Any friend to offeror (c) The person to whom it is made (d) Any friend of offeree
An agreement toput a fire on a person's car is a ______: (a) Legal (b) Voidable (c) Valid (d) Illegal
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