All of the following statements are true about letters of intent except for
Are always legally binding
B. Spells out the initial areas of agreement between the buyer and seller
C. Defines the responsibilities and rights of the buyer and seller while the letter of intent is in force
D. Includes an expiration date
E. Includes a “no shop” provision
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Initial contact should be made through an intermediary as high up in the organization for which of the following firms
A. Companies with annual revenue of less than $25 million
B. Medium sized companies between $25 and $100 million in annual revenue
C. Large, publicly traded firms
D. Small, privately owned firms
E. Small, privately owned competitors
The screening process represents a refinement of the search process and commonly utilizes which of the following as selection criteria
A. Market share, product line, and profitability
B. Product line, profitability, and growth rate
C. Profitability, leverage, and growth rate
Degree of leverage, market share, and growth rate
E. All of the above
Each of the following is true about the acquisition search process except for
A candidate search should start with identifying the primary selection criteria.
B. The number of selection criteria should be as lengthy as possible.
C. At a minimum, the primary criteria should include the industry and desired size of transaction.
D. The size of the transaction may be defined in terms of the maximum purchase price the acquirer is willing to pay.
E. A search strategy entails the use of electronic databases, trade publications, and querying the acquirer’s law, banking, and accounting firms for qualified candidates.
All of the following are true about product life cycles except for
A. Strong sales growth and low barriers to entry often characterize the early stages of a product’s introduction
B. New entrants have substantially poorer cost positions, as a result of their small market shares when compared to earlier entrants.
C. Later phases are characterized by slower market growth rates
During the high growth phases, firms usually experience high positive operating cash flow
E. The introduction of product enhancements can extend a firm’s product life cycle
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