When the Existing Management of a Firm Is Involved in a Going-Private

question 147

Multiple Choice

When the existing management of a firm is involved in a going-private transaction financed primarily with borrowed funds, the transaction is frequently referred to as a:

• A) Joint venture.
• B) Strategic buyout.
• C) Vertical buyout.
• D) Management buyout.
• E) Horizontal acquisition.

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Definitions:

Equity-Financed

A term describing a business that is funded through the sale of equity or shares to investors, rather than through borrowing or debt.

Price Per Share

The amount of money that one share of a company's stock is worth at a given time, reflecting what investors are willing to pay for a piece of the company.

Incremental Value

The additional value created by undertaking a particular action or project, calculated by comparing the difference in an entity's value with and without the action.

Equity Firms

Equity firms, often referred to as private equity firms, are investment companies that acquire, manage, and sell stakes in companies, using their funds or raised capital.