Mergers and Acquisitions | 100+ MCQs with Answers | Part 1
1. What type of knowledge makes "Buy" more favorable than "Build"?
A. Explicit knowledge
B. General knowledge
C. Tacit knowledge ✅
D. Non-core knowledge
2. Which defense mechanism is used to delay a hostile acquisition?
A. Greenmail
B. Staggered board ✅
C. White knight
D. Litigation
3. What does a "shared ownership" issue typically arise in?
A. Licensing
B. Greenfield
C. Joint Venture ✅
D. Acquisition
4. Which of the following is NOT a valid takeover defense?
A. Poison pill
B. Golden parachute
C. Standstill agreement
D. Horizontal merger ✅
5. High asset specificity and potential opportunism support which growth mode?
A. Build
B. Borrow
C. Joint Venture ✅
D. Greenfield
6. Which synergy type is easiest to quantify?
A. Revenue synergy
B. Technological synergy
C. Cost synergy ✅
D. Cultural synergy
7. Why do many M&A deals fail despite strategic rationale?
A. Overvaluation
B. Poor integration ✅
C. Legal restrictions
D. Government intervention
8. A shark repellant strategy is:
A. A post-offer counterattack
B. Designed to attract bidders
C. A set of bylaws deterring takeovers ✅
D. A price premium
9. Which of the following is a contractual growth mode?
A. Joint Venture
B. Greenfield
C. Equity Alliance
D. Licensing ✅
10. What is the main criticism of golden parachutes?
A. They are ineffective
B. They benefit shareholders
C. They reward failure ✅
D. They increase taxes
11. What does the "Build" option in the Build–Borrow–Buy framework primarily imply?
A. Acquisition
B. Internal development ✅
C. Outsourcing
D. Equity partnership
12. Which synergy involves improved borrowing capacity?
A. Financial synergy ✅
B. Cost synergy
C. Strategic fit
D. Technological synergy
13. Which mode offers the least integration challenge?
A. Acquisition
B. Licensing ✅
C. Joint Venture
D. Merger
14. Which of the following best explains the Digestibility Hypothesis?
A. Market share matters more than scale
B. A firm should not acquire more than it can absorb ✅
C. Mergers should be fast and hostile
D. Only small firms should merge
15. A dual-class recapitalization provides:
A. Protection to employees
B. Stronger shareholder rights
C. Voting power separation ✅
D. Shareholder dividends
16. Which form of synergy is the hardest to capture?
A. Cost synergy
B. Revenue synergy
C. Technological synergy
D. Cultural synergy ✅
17. What is the primary aim of cost synergies?
A. Revenue growth
B. Market expansion
C. Expense reduction ✅
D. Customer acquisition
18. When is licensing better than equity alliance?
A. When full control is needed
B. When legal barriers exist
C. When asset specificity is high
D. When risk needs to be minimized ✅
19. What is greenmail?
A. Government tax benefit
B. Paying a hostile bidder to go away ✅
C. Poison pill mechanism
D. Strategic merger
20. Which mode allows the greatest level of control?
A. JV
B. Merger
C. Greenfield
D. Acquisition ✅
21. Which of these is an intermediate structure?
A. Equity alliance ✅
B. Greenfield
C. Licensing
D. Acquisition
22. What is the difference between a white knight and a white squire?
A. The squire takes over operations
B. The knight takes control; squire does not ✅
C. The knight avoids litigation
D. The squire is always hostile
23. What makes technological synergies risky?
A. Legal uncertainty
B. Cultural issues
C. Integration challenges ✅
D. Tax consequences
24. Which resource condition favors building over acquiring?
A. Redundancy
B. Unique internal capability ✅
C. Strategic overlap
D. Scarcity
25. What type of hazard decreases as you move from A to E in the Build–Borrow–Buy model?
A. Contractual hazard ✅
B. Legal hazard
C. Asset hazard
D. Talent hazard
26. What is the core advantage of acquiring over building?
A. Lower risk
B. Faster market entry ✅
C. Better cultural fit
D. Higher flexibility
27. What synergy results from better decision-making post-merger?
A. Cultural synergy
B. Technological synergy
C. Managerial synergy ✅
D. Revenue synergy
28. Which variable is NOT used in the decision to Build–Borrow–Buy?
A. Relevance
B. Tradability
C. Adverse selection
D. Diversification ✅
29. Which of the following indicates the need for a joint venture (JV)?
A. High contractual hazard
B. High asset specificity
C. Moderate trust but high strategic importance
D. All of the above ✅
30. Which synergy type arises from cross-selling opportunities?
A. Managerial
B. Financial
C. Technological
D. Revenue ✅
31. What is a white knight?
A. A defensive strategy to block a merger
B. A friendly acquirer rescuing a target firm ✅
C. A stakeholder with voting rights
D. An internal board member
32. What does a staggered board do?
A. Allows quick boardroom change
B. Delays acquisition by rotating elections ✅
C. Protects shareholders from risk
D. Dissolves on merger
33. Which of the following is not an example of "Borrow"?
A. Licensing
B. Franchising
C. Joint Venture
D. Acquisition ✅
34. What synergy type involves shared geographies and distribution?
A. Technological synergy
B. Geographic synergy ✅
C. Revenue synergy
D. Managerial synergy
35. What is a key consideration in choosing between C and D in BBB?
A. Culture
B. Cost
C. Trust level ✅
D. Market growth
36. What happens if SEBI open-offer norms are violated?
A. Nothing; it's voluntary
B. The acquirer gains automatic rights
C. Penalties and deal invalidation ✅
D. The target is liquidated
37. Reducing corporate overheads falls under which synergy category?
A. Revenue
B. Managerial
C. Cost ✅
D. Strategic
38. What is the adverse selection problem in M&A?
A. Choosing the cheapest target
B. The buyer having less information than the seller ✅
C. Overpaying for synergy
D. Delay in post-merger integration
39. Which synergy is least likely to materialize in the short term?
A. Cost synergy
B. Financial synergy
C. Revenue synergy ✅
D. Geographic synergy
40. Soft resource integration is easier in:
A. Merger
B. Greenfield
C. Joint Venture ✅
D. Acquisition
41. What does the term "trigger threshold" refer to in a poison pill?
A. The point when voting rights expire
B. The price at which a bidder walks away
C. Ownership percentage that activates defense ✅
D. Regulatory approval stage
42. A poison pill strategy is triggered when:
A. A competitor files a legal case
B. A shareholder sells below market value
C. A hostile bidder crosses ownership threshold ✅
D. A board member resigns
43. What is the main drawback of Greenfield investments?
A. Lack of control
B. Slow market entry ✅
C. High trust requirement
D. Regulatory freedom
44. What is “iterative due diligence”?
A. One-time financial check
B. Continuous assessment through the deal process ✅
C. Post-merger audit
D. Legal compliance review
45. Which defense mechanism involves legal restructuring of share rights?
A. Golden parachute
B. White knight
C. Dual-class recapitalization ✅
D. Litigation
46. Which of the following is a pre-offer defense?
A. Standstill agreement
B. Poison pill
C. Greenmail
D. Staggered board ✅
47. When facing market uncertainty, which option is least desirable?
A. Build
B. Borrow
C. Buy ✅
D. License
48. Which synergy is achieved through better leadership or systems?
A. Technological
B. Financial
C. Managerial ✅
D. Revenue
49. Which mode is fastest to execute?
A. Greenfield
B. Build
C. Acquisition ✅
D. Joint Venture
50. What synergy type involves development of safer or improved products?
A. Strategic fit
B. Technological synergy ✅
C. Revenue synergy
D. Cost synergy
51. Can a white squire eventually become a hostile bidder?
A. Yes ✅
B. No
C. Only with board approval
D. Only if shares exceed 50%
52. What is managerial hubris in M&A?
A. Overpaying due to arrogance ✅
B. Hiring too many executives
C. Selling assets prematurely
D. Misreporting synergy numbers
53. What is the main function of a poison pill?
A. Improve company valuation
B. Dilute bidder’s shareholding ✅
C. Increase bidder’s rights
D. Reward shareholders
54. What makes post-merger integration complex?
A. Too many legal approvals
B. Cultural differences ✅
C. Low budget
D. Tax mismatches
55. What synergy is commonly realized through consolidation of overlapping operations?
A. Revenue synergy
B. Technological synergy
C. Cost synergy ✅
D. Geographic synergy
56. What is the difference between financial and legal due diligence?
A. Legal DD focuses on HR; financial DD doesn’t
B. Legal DD assesses synergies; financial DD doesn’t
C. Legal DD deals with compliance; financial DD with valuation ✅
D. Legal DD is optional
57. What is greenmail?
A. Buying out a friendly acquirer
B. Paying off a hostile bidder to stop takeover ✅
C. Employee share buyback
D. Tax inversion
58. What does the golden parachute benefit?
A. Shareholders
B. Target company
C. Senior management ✅
D. Government
59. Which model addresses adverse selection explicitly?
A. Build–Borrow–Buy ✅
B. Five Forces
C. GE-McKinsey
D. Ansoff Matrix
60. Which of the following is not a cost synergy?
A. Reduced headcount
B. Shared services
C. Better cross-selling ✅
D. Consolidated IT systems
61. Which of the following is NOT a bonus clause that can void a deal?
A. Staggered board clause
B. Material adverse change ✅
C. Poison pill
D. Trigger threshold
62. What is the primary reason for choosing "Buy" instead of "Borrow"?
A. Control ✅
B. Cost
C. Speed
D. Culture
63. What synergy results from shared geographies and joint distribution?
A. Geographic synergy ✅
B. Financial synergy
C. Managerial synergy
D. Cultural synergy
64. What is a standstill agreement?
A. Delay on tax filings
B. Bidder agrees not to acquire more shares ✅
C. Hostile takeover tool
D. Dividend postponement
65. What is a tactical cost synergy?
A. Reduced pricing strategy
B. Quick wins in cost savings ✅
C. R&D investments
D. Increased advertising
66. Which synergy involves sharing R&D capabilities?
A. Revenue
B. Managerial
C. Technological ✅
D. Cost
67. What is the main drawback of a merger?
A. Tax savings
B. Culture clash ✅
C. High liquidity
D. Higher trust
68. Why do revenue synergies often take longer to realize than cost synergies?
A. More departments are involved
B. Market response is slower ✅
C. Legal barriers
D. IT challenges
69. What does "digestibility" in acquisitions refer to?
A. Cost per share
B. Ability to absorb the target without disruption ✅
C. Tax liabilities
D. Time-to-market
70. Which type of firm is most vulnerable to hostile takeovers?
A. Family-owned
B. Heavily indebted ✅
C. Private companies
D. Multi-divisional firms
71. Which of the following is a growth mode based on shared control and resources?
A. Build
B. Borrow
C. JV ✅
D. Greenfield
72. Which mode is best when regulatory barriers are high?
A. Acquisition
B. Licensing
C. Greenfield ✅
D. Franchising
73. Which mode avoids cultural clashes the most?
A. JV
B. Acquisition
C. Licensing ✅
D. Merger
74. What is the strategic rationale for using a joint venture?
A. Exit strategy
B. Gain capital
C. Access to complementary assets ✅
D. Tax benefits
75. Which option has the highest opportunism risk in BBB?
A. Acquisition
B. Build
C. Licensing ✅
D. Greenfield
76. Why do many M&A deals fail despite strategic rationale?
A. Poor marketing
B. Overfunding
C. Integration issues ✅
D. Lack of government support
77. Which clause can void a deal even after the agreement is signed?
A. Integration clause
B. Material adverse change ✅
C. Trust clause
D. Voting clause
78. What is a white squire?
A. Hostile acquirer
B. Investor that takes a minority stake to prevent takeover ✅
C. Company buying assets pre-bid
D. Foreign government stakeholder
79. Which of the following best explains the Digestibility Hypothesis?
A. Cost must match value
B. Cultural barriers can block entry
C. Large acquisitions are harder to integrate ✅
D. Small targets yield fewer synergies
80. What type of knowledge makes "Buy" more favorable than "Build"?
A. Explicit knowledge
B. Open-source knowledge
C. Tacit knowledge ✅
D. Technical documentation
81. Which defense mechanism is used to delay a hostile acquisition?
A. White knight
B. Shark repellant
C. Staggered board ✅
D. Trigger clause
82. Which synergy type is easiest to quantify?
A. Revenue
B. Managerial
C. Cultural
D. Cost ✅
83. What is the main criticism of golden parachutes?
A. They’re too flexible
B. They dilute equity
C. They benefit management, not shareholders ✅
D. They increase tax liability
84. What is meant by “shared ownership” issue in M&A?
A. Common market share
B. Overlapping investors
C. Joint control and potential conflict ✅
D. Stock split after acquisition
85. What synergy is achieved through improved borrowing capacity?
A. Financial synergy ✅
B. Revenue synergy
C. Technological synergy
D. Operational synergy
86. When is licensing better than equity alliance?
A. High control needed
B. Strategic importance is high
C. Speed and flexibility are key ✅
D. Tacit knowledge is involved
87. What is a shark repellant strategy?
A. Temporary acquisition freeze
B. Amendment making acquisition harder ✅
C. Legal injection
D. Hiring new directors
88. Which of these is an intermediate structure in corporate development?
A. Greenfield
B. Equity alliance ✅
C. Merger
D. Acquisition
89. Which synergy type is hardest to capture in M&A?
A. Cost
B. Managerial
C. Revenue ✅
D. Financial
90. What does the Build–Borrow–Buy framework assess first?
A. Culture
B. Relevance of resources ✅
C. Market potential
D. Target cost
91. What type of hazard decreases from Build to Buy in the BBB model?
A. Legal hazard
B. Cultural hazard
C. Contractual hazard ✅
D. Financial hazard
92. Which growth mode is most affected by trust levels?
A. Acquisition
B. Greenfield
C. Joint Venture ✅
D. Build
93. What is the primary aim of cost synergies?
A. Increase innovation
B. Maximize revenue
C. Reduce duplication ✅
D. Strengthen distribution
94. What is the main benefit of technological synergies?
A. Lower salaries
B. Faster market exit
C. Joint innovation ✅
D. Streamlined hiring
95. What kind of synergy involves improved products?
A. Managerial
B. Technological ✅
C. Financial
D. Legal
96. What happens when SEBI norms are violated during open offer?
A. Shareholders gain power
B. Deal is fast-tracked
C. Penal action and deal suspension ✅
D. No effect
97. What is a strategic fit?
A. Geographical overlap
B. Shared strategic goals ✅
C. Equal ownership
D. Leadership match
98. What form of integration best avoids conflict in M&A?
A. Licensing ✅
B. Merger
C. Equity Alliance
D. Joint Venture
99. How do private benefits harm minority shareholders in M&A?
A. Share price increases
B. Management gains at their expense ✅
C. New debt is issued
D. Integration becomes easier
100. Which form of synergy includes combining overlapping supply chains?
A. Strategic synergy
B. Technological synergy
C. Cost synergy ✅
D. Managerial synergy
