Series 79 practice questioneasyPrecedent Transaction Analysis
Which factor most directly drives a higher control premium in public company acquisition transactions?
- AThe target’s dividend yield
- BThe presence of multiple strategic bidders✓ Correct answer
- CThe company’s recent stock price volatility
- DA low debt-to-equity ratio
Explanation
Why B — The presence of multiple strategic bidders
A competitive bidding process can increase control premiums, as buyers are willing to pay more to win the deal. Focusing on dividends or capital structure misses the primary driver of premium size.
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