The Main Advantage of Placements to Raise Additional Equity Funds

question 38

Multiple Choice

The main advantage of placements to raise additional equity funds compared to a rights issue is:

• A) the discount to current market price may be less.
• B) it can be carried out much more quickly.
• C) a selective placement can sell shares to friendly institutional investors.
• D) it reduces the proportion of ownership by existing shareholders.

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Definitions:

Acquisition

The process by which one company takes over another and becomes the new owner.

Synergy Value

The additional value created by combining two companies, often expected from efficiencies or enhanced market power.

Cash Deal

A business transaction where payment is made in full using cash at the time of the transaction.

Post-Merger

Pertains to the period or activities that follow the completion of a merger, focusing on the integration of the entities involved and the realization of synergies.