When a private equity firm purchases the outstanding equity of a publicly traded firm (thereby taking the companyprivate) and finances the transaction primarily with debt, the transaction is called a(n):Select one correct answer:Leveraged buyoutPrivate leveraged transactionInitial public offeringCash offer

Leveraged buy out : For acquisition of a company by financing this transaction through debt is…

Answered: When a private equity firm purchases…

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter15: Harvesting The Business Venture Investment

Section: Chapter Questions

Problem 10DQ

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An offering of shares to institutional investors at a discount to the current market price is known as a: Select one: a. Initial Public Offering (IPO). b. Private Placement c. Rights Issue d. Dividend Reinvestment Plan (DRP).
d) Using the OPT (Option Pricing Theory) framework explain the pay-off structures of both equityholders and debtholders of a limited liability company.
Which of the following statements is correct? O Flotation costs under a best-efforts arrangement typically are less for a given new equity issue than the costs associated with an underwritten offering, and the corporation is more certain of getting the needed funds under a best-efforts offering. This is why best efforts deals are most common. O If a firm decides to issue securities through a direct (or private) placement, then the underwriting syndicate that is formed to distribute the securities to the public may. at its discretion, decide either to guarantee or not to guarantee the sale of the securities. O If the demand curve for a firm's stock is relatively flat. the firm will havea more difficult time raising a large amount of new equity funds for expansion than would be true if this demand curve were steeper. OIt is possible for a firm to go public, and yet not ralse any additional capital. O None of these.
Evaluate the following assets classes or alternative investments from risk and return point of view. Describe their advantages and disadvantages. Corporate bonds Corporate stocks Real estate Derivatives Commodities Private equity (venture capital)
This allows firm to issue public equity very quickly and often at lower costs as long as they are pre-authorized to do so SEO Shelf registration Private placement Securitization Syndicated loans Project financing
1. Kind according to purpose (Choose 1) a. Horizontalb. Verticalc. Product Extentiond. Market Extensione. Congenericf. Conglomerate 2. Kind according to approach to the target firm (Choose 1)a. Friendlyb. Hostile 3. Kind according to acquisition mode (Choose 1) a. Cashb. Equity swapc. Mix of cash and equity swap
remaining: 18) Firms carry out share repurchase agreements in a number of ways, including all of the following EXCEPT they __. a.buy treasury shares b.buy from shareholders through a tender offer c.buy outstanding shares in the open market d.negotiate a purchase privately from large holders, particularly institutions
Bootstrap financings are buyouts financed by a. the company managers' own assets, b. finance companies, c. junk bonds, d. new issuance of bonds.
Which of the following statement is true? a. In brokered markets, buyers and sellers confront each other directly and bargain over price. b. Primary market is the market for trading outstanding securities. c. Preference shareholders have a higher priority claim on company’s assets than ordinary shareholders in the event of insolvency. d. Ordinary shareholders receive fixed dividend payments.
1. Identify the most acceptable value of share capital in exchange of non-cash asset. options •Fair market value of share issued •Fair market value of non-cash asset received •Par value of share capital issued. •Carrying value of the non-cash asset received. 2. Which of the following is included in the equity section of a corporate business? •Investment in equity shares •Treasury shares •Subscription Receivable – current •Unearned revenue
Which of the following is INCORRECT description for private equity transactions? Group of answer choices a. There are liquid public markets for privately held securities such as NASDAQ. b. The process of creating value in private equity, whether building a brand-new company or turning around an established one requires significant time and means a long-term relationship. c. The general partner participates actively in the governance of the investment d. Private equity investing is a lot of work as gaining access to better opportunities requires active sourcing and negotiation
What are the differences between a public debt offering and a private debt offering? Multiple answers may be chosen. A. The public offering has higher cost of issuance B. Only public offering can be bought by retail investors C. The private offering can be completed faster D. Only private offerings have fixed interest rates

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