Order Leveraged Buyouts Discussion Assignment

Order Leveraged Buyouts Discussion Assignment
Order Leveraged Buyouts Discussion Assignment
1) All of the following are typical “financial sponsors” EXCEPT
A. Private equity firm
B. Commercial bank
C. Hedge fund
D. Venture capital firm
2) Which of the following are limited partners that provide financial sponsors
with investment capital?
I. Pension funds
II. Insurance companies
III. University endowments
IV. Wealthy families
A. I and II
B. I and III
C. I, III, and IV
D. I, II, III, and IV
3) Which of the following is NOT part of an investment bank’s financing
commitment?
A. Commitment letter
B. Institutional letter
C. Engagement letter
D. Fee letter
4) Bank lenders consist of all of the following EXCEPT
A. Commercial banks
B. Loan mutual funds
C. Equity asset managers
D. Credit hedge funds
CHAPTER 4
150 CHAPTER 4 QUESTIONS
5) Bond investors consist of all of the following EXCEPT
A. Hedge funds
B. Insurance companies
C. Distressed debt funds
D. REITs
Order Leveraged Buyouts Discussion Assignment
6) A confidential information memorandum (CIM) for a credit facility contains
all of the following EXCEPT
A. Investment highlights
B. Projected financials
C. Description of Notes
D. Industry overview
7) How does target company management provide tangible value in an LBO?
A. Helping to achieve favorable financing terms
B. Ability to draft a quality 10-K
C. Knowledge of IPO process
D. Management only provides intangible benefits
8) All of the following are reasons for a public company to consider a take-private
LBO EXCEPT
A. Onerous Sarbanes-Oxley requirements
B. Access to equity capital markets
C. Belief that the public market is undervaluing the company
D. Belief that public ownership is too onerous
9) Which of the following would be potential LBO candidates?
I. Troubled companies
II. Companies in fragmented markets
III. Solid performing companies
IV. Non-core subsidiaries
A. III and IV
B. I, II, and III
C. II, III, and IV
D. I, II, III, and IV
Leveraged Buyouts 151
10) The ability to maximize leverage in an LBO transaction is facilitated for a
company with which of the following characteristics?
A. Track record for bolt-on acquisitions
B. Tight covenant package
C. Strong asset base
D. Large debt balance
11) What characteristics do sponsors look for when evaluating the management
team of an LBO candidate?
I. Track record of consummating accretive acquisitions
II. Past experience with a leveraged capital structure
III. Substantial prior compensation
IV. History of implementing poison pills
A. I and II
B. I and III
C. II, III, and IV
D. I, II, III, and IV
12) Which of the following are common exit strategies when financial sponsors
monetize their investments?
I. Refinancing
II. IPO
III. Sale to a strategic buyer
IV. Sale to another sponsor
A. II and IV
B. I, II, and III
C. I, III, and IV
D. II, III, and IV
13) Which of the following is NOT a typical means for a sponsor to achieve
multiple expansion upon exit of their investment?
A. Acquiring similar businesses at below market multiples
B. Entering into new high growth segments
C. Efficiency enhancem
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