Assume That Two Companies Wish to Engage in a Business

question 25

Multiple Choice

Assume that two companies wish to engage in a Business Combination involving a share exchange. Once the share exchange is consummated, each shareholder group will have an equal number of voting shares. Which of the following statements best describes the course of action that must be taken under these circumstances?

• A) Other factors must be examined to determine which shareholder group is more dominant.
• B) The company with the largest net assets (at fair market value) is deemed to be the acquirer.
• C) No acquirer can be identified since no shareholder group has majority voting control, so the share exchange must be annulled.
• D) The Boards of Directors of both companies must enter into discussions to agree on which party will be the acquirer.

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Definitions:

Temperament

The innate aspect of an individual's personality, such as mood or behavior predispositions.

Social Identity

The “we” aspect of our self-concept; the part of our answer to “Who am I?” that comes from our group memberships.

Maturation Level

The state or process of reaching full development or potential, often discussed in the context of physical, emotional, or intellectual growth.

Secure Attachments

Emotional bonds characterized by a sense of safety, security, and trust, often discussed in the context of early child development.