CFM CFM M&A Modeling & Deal Structuring

Question 1

In an M&A accretion/dilution analysis, a deal is considered 'accretive' when:

Accepted Answer

The acquirer's post-deal EPS is higher than its standalone EPS

Answer

The target's revenue exceeds the acquirer's revenue

Answer

The deal is financed entirely with cash rather than stock

Answer

The target's EBITDA margin is above 30%

Question 2

Which of the following is the primary driver of dilution in an all-stock acquisition?

Accepted Answer

New shares issued to target shareholders dilute the acquirer's EPS

Answer

Increased depreciation from asset write-ups

Answer

Higher interest expense from acquisition debt

Answer

Goodwill impairment charges recorded post-close

Question 3

What does 'purchase price allocation' (PPA) require in M&A accounting under US GAAP?

Accepted Answer

Assigning the acquisition price to identifiable assets and liabilities at fair value, with the remainder as goodwill

Answer

Allocating synergies to specific cost centers before close

Answer

Distributing deal fees proportionally between buyer and seller

Answer

Recording all intangibles at historical cost

Question 4

In an M&A deal, which type of synergy refers to cost savings achieved by combining two companies' operations?

Accepted Answer

Cost synergies

Answer

Revenue synergies

Answer

Tax synergies

Answer

Financial synergies

Question 5

What is the 'breakeven synergy' in an M&A context?

Accepted Answer

The level of synergies required to justify the premium paid over the target's standalone value

Answer

The minimum revenue growth rate needed to avoid EPS dilution

Answer

The point at which deal fees equal the target's annual EBITDA

Answer

The synergy amount that exactly offsets integration costs

Question 6

Which structure allows an acquirer to purchase a target's assets without assuming all of its liabilities?

Accepted Answer

Asset purchase

Answer

Stock purchase

Answer

Merger of equals

Answer

Tender offer