Mergers and Acquisitions | Business Strategy Success | 100+ MCQs | Part 2
Q1. What is the primary objective of most M&A activities?
A. Reduce employee count
B. Increase customer complaints
C. Achieve strategic growth
D. Avoid paying taxes
Answer: C. Achieve strategic growth
Q2. Which of the following best defines a merger?
A. One company replaces another
B. One company takes control of another without consent
C. Two companies combine to form a single new entity
D. A company changes its name only
Answer: C. Two companies combine to form a single new entity
Q3. In which type of merger do companies operate in the same industry at the same production level?
A. Vertical
B. Horizontal
C. Conglomerate
D. Market-extension
Answer: B. Horizontal
Q4. What type of merger occurred when Amazon acquired Whole Foods?
A. Conglomerate
B. Horizontal
C. Vertical
D. Market-extension
Answer: C. Vertical
Q5. Which of the following is an example of a conglomerate merger?
A. Microsoft & Activision Blizzard
B. Amazon & Whole Foods
C. Berkshire Hathaway & Duracell
D. Disney & 21st Century Fox
Answer: C. Berkshire Hathaway & Duracell
Q6. What is a primary reason companies pursue horizontal mergers?
A. Diversify their product portfolio
B. Eliminate competition
C. Avoid regulatory compliance
D. Reduce customer base
Answer: B. Eliminate competition
Q7. What is a common disadvantage of M&A?
A. Lower taxes
B. Cultural clash
C. Faster innovation
D. Better stock options
Answer: B. Cultural clash
Q8. What does a vertical merger typically seek to control?
A. Retail customers
B. Supply chain
C. Advertising agencies
D. Regulatory agencies
Answer: B. Supply chain
Q9. What is due diligence in the M&A process?
A. Legal contract signing
B. A sales pitch
C. A thorough audit and analysis before the deal
D. Employee onboarding
Answer: C. A thorough audit and analysis before the deal
Q10. Why was the Pfizer-Allergan merger stopped?
A. Technology failures
B. Leadership disputes
C. Tax inversion rule changes
D. Labor strikes
Answer: C. Tax inversion rule changes
Q11. What is a friendly acquisition?
A. Acquisition with legal dispute
B. Acquisition with mutual agreement
C. Acquisition through a third party
D. Acquisition without any payment
Answer: B. Acquisition with mutual agreement
Q12. In which year did Disney acquire 21st Century Fox?
A. 2015
B. 2016
C. 2018
D. 2020
Answer: C. 2018
Q13. Which type of merger combines companies selling related but different products in the same market?
A. Horizontal
B. Vertical
C. Product-extension
D. Market-extension
Answer: C. Product-extension
Q14. The main goal of market-extension mergers is to:
A. Reduce product line
B. Decrease profits
C. Expand into new geographic areas
D. Cut employee costs
Answer: C. Expand into new geographic areas
Q15. Which merger type involves companies in completely unrelated industries?
A. Conglomerate
B. Horizontal
C. Vertical
D. Market-extension
Answer: A. Conglomerate
Q16. A hostile acquisition occurs when:
A. Both companies want the deal
B. The target company resists the takeover
C. The company buys its own shares
D. It involves employees' consent only
Answer: B. The target company resists the takeover
Q17. An example of a market-extension merger is:
A. Disney & Pixar
B. Microsoft & Activision
C. Heineken & FEMSA
D. Amazon & Whole Foods
Answer: C. Heineken & FEMSA
Q18. What is a major financial benefit of M&A?
A. Cultural diversity
B. Redundant roles
C. Economies of scale
D. Higher tariffs
Answer: C. Economies of scale
Q19. What type of risk is posed by overvaluation in M&A?
A. Legal risk
B. Technological risk
C. Financial risk
D. Employee risk
Answer: C. Financial risk
Q20. What is synergy in the context of M&A?
A. Cultural alignment
B. Joint reduction of workforce
C. Combined strengths for greater profitability
D. Brand rebranding
Answer: C. Combined strengths for greater profitability
Q21. Which company acquired LinkedIn in 2016?
A. Amazon
B. Facebook
C. Microsoft
D. Google
Answer: C. Microsoft
Q22. What was the primary motivation for Disney acquiring 21st Century Fox?
A. Technology innovation
B. Tax avoidance
C. Content expansion and streaming
D. Logistics improvements
Answer: C. Content expansion and streaming
Q23. Redundancies in M&A often lead to:
A. Increased hiring
B. System integration
C. Layoffs
D. Higher product prices
Answer: C. Layoffs
Q24. Regulatory scrutiny in M&A is typically aimed at preventing:
A. Foreign investments
B. Tax benefits
C. Monopoly or anti-competitive practices
D. Branding issues
Answer: C. Monopoly or anti-competitive practices
Q25. Microsoft’s acquisition of Activision Blizzard in 2022 is an example of which type of merger?
A. Market-extension
B. Conglomerate
C. Product-extension
D. Vertical
Answer: C. Product-extension
Q26. What is a key non-financial challenge in M&A?
A. Market share
B. Cultural integration
C. Supplier contracts
D. Stock valuation
Answer: B. Cultural integration
Q27. What valuation did the Dell–EMC Corp deal have in 2015?
A. $71.3 billion
B. $13 billion
C. $67 billion
D. $61 billion
Answer: C. $67 billion
Q28. The process of aligning operations and systems after a merger is known as:
A. Diversification
B. Due diligence
C. Post-merger integration
D. Market analysis
Answer: C. Post-merger integration
Q29. What is the usual timeframe for synergy realization after an M&A deal?
A. Immediate
B. 1 month
C. 2–5 years
D. 10 years
Answer: C. 2–5 years
Q30. What happens during the due diligence phase?
A. Merger branding
B. Operational merging
C. Legal and financial examination
D. Tax declaration
Answer: C. Legal and financial examination
Q31. Which company acquired VMware in 2023?
A. Amazon
B. Dell
C. Broadcom
D. Intel
Answer: C. Broadcom
Q32. What type of merger was Broadcom’s acquisition of VMware?
A. Horizontal
B. Vertical
C. Conglomerate
D. Product-extension
Answer: B. Vertical
Q33. Why are loss-making companies sometimes acquired?
A. For media attention
B. To reduce tax liability
C. To shut them down
D. To avoid regulations
Answer: B. To reduce tax liability
Q34. What’s a key goal in a product-extension merger?
A. Cut R&D costs
B. Broaden the product portfolio
C. Enter unrelated industries
D. Reduce workforce
Answer: B. Broaden the product portfolio
Q35. What’s the main reason M&A deals fail?
A. CEO disagreement
B. Poor customer feedback
C. Poor cultural fit and integration
D. Incomplete contracts
Answer: C. Poor cultural fit and integration
Q36. What does a company gain from acquiring a tech startup?
A. Legal loopholes
B. Brand damage
C. Innovation and talent
D. Litigation risk
Answer: C. Innovation and talent
Q37. What is meant by "synergy" in M&A?
A. Reducing marketing budgets
B. Combining to produce more value together than separately
C. Canceling debts
D. Merging brand logos
Answer: B. Combining to produce more value together than separately
Q38. In M&A, "integration" refers to:
A. Legal approvals
B. Combining teams, systems, and processes
C. Halting customer service
D. Buying competitor data
Answer: B. Combining teams, systems, and processes
Q39. Which of the following is a disadvantage of M&A?
A. Brand loyalty
B. Customer expansion
C. Overvaluation
D. Stronger competition
Answer: C. Overvaluation
Q40. An M&A strategy that fails to consider cultural alignment is likely to face:
A. Improved morale
B. Seamless integration
C. Employee resistance and confusion
D. Higher tax benefits
Answer: C. Employee resistance and confusion
Q41. What regulatory body might scrutinize a merger in the U.S.?
A. Central Bank
B. Federal Trade Commission (FTC)
C. World Bank
D. International Monetary Fund (IMF)
Answer: B. Federal Trade Commission (FTC)
Q42. When two competing firms in the same market merge, it may lead to:
A. Monopoly concerns
B. Lower product pricing
C. Improved brand reputation
D. Market liberalization
Answer: A. Monopoly concerns
Q43. In which scenario is a merger called "market-extension"?
A. A global tech company buys a chip maker
B. Two firms selling the same products in different locations combine
C. Competitors merge in the same city
D. A bank acquires an unrelated fintech company
Answer: B. Two firms selling the same products in different locations combine
Q44. What term describes the financial investigation before finalizing a merger?
A. Market analysis
B. Stock audit
C. Due diligence
D. Public offering
Answer: C. Due diligence
Q45. What type of M&A is often used for risk diversification?
A. Vertical
B. Horizontal
C. Conglomerate
D. Product-extension
Answer: C. Conglomerate
Q46. What is a common operational problem post-merger?
A. Increased customer satisfaction
B. Smoother processes
C. System incompatibility
D. Faster integration
Answer: C. System incompatibility
Q47. What was the value of Microsoft’s Activision deal in 2022?
A. $26.2 billion
B. $68.7 billion
C. $13 billion
D. $71.3 billion
Answer: B. $68.7 billion
Q48. What type of merger is Facebook’s acquisition of Instagram?
A. Vertical
B. Horizontal
C. Conglomerate
D. Market-extension
Answer: B. Horizontal
Q49. A strategic acquisition often aims to:
A. Shrink market reach
B. Introduce inefficiencies
C. Access new technology
D. Increase taxation
Answer: C. Access new technology
Q50. What is a major reason regulators block M&A deals?
A. Low valuation
B. Global expansion
C. Antitrust concerns
D. Company branding
Answer: C. Antitrust concerns
Q51. What is the most important aspect of post-merger success?
A. Rebranding the website
B. Cultural integration and synergy realization
C. Cutting marketing costs
D. Eliminating all prior staff
Answer: B. Cultural integration and synergy realization
Q52. What happens when companies fail to realize expected synergies?
A. The deal is declared a success
B. Cost overruns and revenue shortfalls
C. Faster integration
D. Improved valuation
Answer: B. Cost overruns and revenue shortfalls
Q53. Why do companies prefer friendly acquisitions?
A. For better tax planning
B. To avoid employee retention
C. For smoother integration and cooperation
D. To escape due diligence
Answer: C. For smoother integration and cooperation
Q54. When a company is overvalued in an acquisition, it can result in:
A. Customer loyalty
B. Enhanced ROI
C. Shareholder dissatisfaction
D. Smooth transition
Answer: C. Shareholder dissatisfaction
Q55. The main goal of a horizontal merger is:
A. Cost diversification
B. Entering unrelated markets
C. Gaining market share and reducing competition
D. Acquiring patents
Answer: C. Gaining market share and reducing competition
Q56. An acquisition is considered hostile when:
A. Shareholders are uninvolved
B. Employees are unaware
C. The target company’s board opposes the takeover
D. It is not profitable
Answer: C. The target company’s board opposes the takeover
Q57. When merging with an unrelated business, what is a common risk?
A. Brand recognition
B. Regulatory cost
C. Cultural disconnect and management mismatch
D. Employee promotion
Answer: C. Cultural disconnect and management mismatch
Q58. The success of Disney+ was primarily supported by which M&A deal?
A. Disney–Marvel
B. Disney–21st Century Fox
C. Disney–Pixar
D. Disney–Lucasfilm
Answer: B. Disney–21st Century Fox
Q59. What typically initiates an acquisition strategy?
A. Customer complaints
B. Market competition or growth goals
C. Annual appraisal cycle
D. IPO filing
Answer: B. Market competition or growth goals
Q60. The purpose of economies of scale in M&A is to:
A. Increase operating costs
B. Decrease operational efficiency
C. Reduce per-unit costs through larger scale
D. Introduce new taxes
Answer: C. Reduce per-unit costs through larger scale
Q61. Which of the following is a reason companies engage in international M&A?
A. To avoid expansion
B. To increase taxation
C. To access global markets and diversify risk
D. To shut down foreign operations
Answer: C. To access global markets and diversify risk
Q62. What type of merger helps expand product lines for the same customer base?
A. Horizontal
B. Vertical
C. Product-extension
D. Conglomerate
Answer: C. Product-extension
Q63. In M&A, what is the primary objective of diversification?
A. Reduce advertising expenses
B. Increase product cost
C. Minimize business risk
D. Promote staff layoffs
Answer: C. Minimize business risk
Q64. What risk arises if post-merger integration fails?
A. Increased tax deductions
B. Seamless cultural transition
C. Loss of synergies and poor performance
D. Enhanced branding
Answer: C. Loss of synergies and poor performance
Q65. What should ideally precede any M&A transaction?
A. Legal dispute
B. Employee survey
C. Strategic planning and due diligence
D. Product testing
Answer: C. Strategic planning and due diligence
Q66. M&A deals are often used to eliminate:
A. Shareholder rights
B. Market inefficiencies
C. Competition
D. Brand identity
Answer: C. Competition
Q67. What happens if the acquiring company fails to retain key talent from the target company?
A. Improved innovation
B. Financial gain
C. Brain drain and operational setbacks
D. Faster synergy realization
Answer: C. Brain drain and operational setbacks
Q68. In a successful merger, customer experience should ideally:
A. Be deprioritized
B. Be completely redesigned
C. Improve or remain stable
D. Decline to reduce cost
Answer: C. Improve or remain stable
Q69. One key operational challenge post-merger is:
A. Increasing inventory
B. Harmonizing IT systems
C. Raising prices
D. Shutting down offices
Answer: B. Harmonizing IT systems
Q70. Cross-border M&A activities are primarily motivated by:
A. Rising domestic interest rates
B. Limited branding opportunities
C. Market saturation and international expansion
D. Avoidance of shareholder communication
Answer: C. Market saturation and international expansion
Q71. What does a successful merger often require from leadership?
A. Isolation from employees
B. Minimal communication
C. Unified vision and transparent communication
D. Frequent restructuring
Answer: C. Unified vision and transparent communication
Q72. What can hostile takeovers result in?
A. Smooth transitions
B. Stronger collaboration
C. Resistance and legal complications
D. Reduced due diligence
Answer: C. Resistance and legal complications
Q73. Why do companies pay a premium during an acquisition?
A. To reduce liabilities
B. To delay the process
C. To secure control of a valuable asset
D. To minimize taxes
Answer: C. To secure control of a valuable asset
Q74. What is one way to evaluate post-merger success?
A. Number of employees retained
B. Market share growth and profitability
C. Office relocations
D. Reduction in meeting frequency
Answer: B. Market share growth and profitability
Q75. A "reverse merger" occurs when:
A. The target acquires the acquirer
B. A private company merges with a public one to go public
C. Both companies exit the market
D. A company exits an M&A deal
Answer: B. A private company merges with a public one to go public
Q76. What factor commonly determines M&A success in service industries?
A. Inventory size
B. Office location
C. Employee experience and service continuity
D. Advertising budget
Answer: C. Employee experience and service continuity
Q77. What was the goal behind Morgan Stanley acquiring E*TRADE in 2020?
A. Eliminate a competitor
B. Digital transformation and customer acquisition
C. Outsource R&D
D. Brand retirement
Answer: B. Digital transformation and customer acquisition
Q78. A failed M&A deal can negatively affect:
A. Stock prices
B. Market perception
C. Internal morale
D. All of the above
Answer: D. All of the above
Q79. M&A deals in tech sectors are usually focused on:
A. Outsourcing
B. Acquiring legacy systems
C. Gaining intellectual property and talent
D. Regulatory arbitrage
Answer: C. Gaining intellectual property and talent
Q80. Post-merger brand integration must prioritize:
A. Removing the old brand entirely
B. Employee termination
C. Customer perception and loyalty
D. Price increase
Answer: C. Customer perception and loyalty
Q81. The largest M&A deals usually occur in which sectors?
A. Agriculture and mining
B. Tech, telecom, and pharma
C. Public education
D. Non-profits
Answer: B. Tech, telecom, and pharma
Q82. M&A in the telecom industry often aims to:
A. Slow data delivery
B. Cut advertising
C. Expand infrastructure and coverage
D. Increase device prices
Answer: C. Expand infrastructure and coverage
Q83. How do companies usually fund M&A deals?
A. Charity grants
B. Loans, stock swaps, or cash reserves
C. Lottery winnings
D. Import-export revenue
Answer: B. Loans, stock swaps, or cash reserves
Q84. Cultural mismatch in M&A can lead to:
A. Enhanced cooperation
B. Lower attrition
C. Talent loss and inefficiency
D. Seamless integration
Answer: C. Talent loss and inefficiency
Q85. An acquisition driven solely by tax incentives is:
A. Strategic
B. Legal but risky
C. Operational
D. Regulatory
Answer: B. Legal but risky
Q86. Why do governments regulate M&A?
A. To reduce foreign trade
B. To protect employment
C. To prevent monopolies and ensure fair competition
D. To enforce branding rules
Answer: C. To prevent monopolies and ensure fair competition
Q87. What makes due diligence successful?
A. Ignoring financial records
B. Hiring only internal staff
C. Comprehensive analysis of legal, financial, and operational data
D. Skipping regulatory checks
Answer: C. Comprehensive analysis of legal, financial, and operational data
Q88. What’s a likely result of a well-executed merger?
A. Higher costs
B. Employee demotivation
C. Greater efficiency and stronger market position
D. Declining revenue
Answer: C. Greater efficiency and stronger market position
Q89. Which type of merger is least likely to raise antitrust concerns?
A. Horizontal
B. Vertical
C. Conglomerate
D. Market-extension
Answer: C. Conglomerate
Q90. Regulatory bodies can block M&A deals if they:
A. Reduce taxes
B. Improve supply chain
C. Harm consumer choice and market competition
D. Create jobs
Answer: C. Harm consumer choice and market competition
Q91. In which merger type is customer overlap most likely?
A. Conglomerate
B. Horizontal
C. Market-extension
D. Product-extension
Answer: B. Horizontal
Q92. M&A often leads to innovation because:
A. Innovation is forced
B. New employees demand it
C. Combined R&D resources and capabilities
D. Customers insist
Answer: C. Combined R&D resources and capabilities
Q93. A key long-term M&A success factor is:
A. CEO popularity
B. Annual reports
C. Vision alignment and cultural fit
D. Location of offices
Answer: C. Vision alignment and cultural fit
Q94. What’s the first step in most M&A deals?
A. Laying off staff
B. Signing the merger certificate
C. Strategic goal identification
D. Tax documentation
Answer: C. Strategic goal identification
Q95. Technology-driven M&A can lead to:
A. Lower productivity
B. Innovation stagnation
C. Enhanced capabilities and market competitiveness
D. Loss of market share
Answer: C. Enhanced capabilities and market competitiveness
Q96. What makes cross-border M&A complex?
A. Shared laws
B. Common language
C. Legal, regulatory, and cultural differences
D. Similar currencies
Answer: C. Legal, regulatory, and cultural differences
Q97. In which case is vertical integration through M&A most beneficial?
A. Retail firms wanting better suppliers
B. Brands needing marketing
C. Tech firms acquiring finance firms
D. Non-profits merging with for-profits
Answer: A. Retail firms wanting better suppliers
Q98. How do companies handle overlapping roles post-merger?
A. Ignore the issue
B. Create confusion
C. Restructure and sometimes lay off redundant staff
D. Increase salaries for all
Answer: C. Restructure and sometimes lay off redundant staff
Q99. Which of the following is a long-term risk of M&A?
A. Immediate profitability
B. Integration cost overruns
C. Marketing campaigns
D. Product launches
Answer: B. Integration cost overruns
Q100. What is the most accurate description of M&A success?
A. Immediate increase in valuation
B. Reduction in product offerings
C. Long-term strategic gains, synergy, and smooth integration
D. Elimination of all competition
Answer: C. Long-term strategic gains, synergy, and smooth integration
