Advanced Business Vocabulary

1. A merger occurs when two companies combine to form a new entity, and both cease to exist as separate businesses.

    True

    False

2. In an acquisition, the acquiring company often retains the name of the company it purchases.

    True

    False

3. Horizontal mergers occur between companies operating in the same industry and at the same stage of production.

    True

    False

4. A hostile takeover happens when the acquiring company seeks to purchase the target company without the approval of its board of directors.

    True

    False

5. Synergies in mergers often refer to the cost savings or revenue enhancements that result from combining companies.

    True

    False

6. Acquisitions are always seen as friendly, with both companies agreeing to the terms of the purchase.

    True

    False

7. Vertical mergers occur between companies operating at different stages of the production process, such as a manufacturer merging with a supplier.

    True

    False

8. A leveraged buyout (LBO) uses a company's cash reserves to finance the acquisition.

    True

    False