When a Management Team Buys the Firm from Current Shareholders

question 34

Multiple Choice

When a management team buys the firm from current shareholders while continuing to manage and often incurring large segments of debt, it is known as a:

• A)Management buyout.
• B)Spin-off.
• C)Successful greenmail attempt.
• D)Corporate break-up.

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Definitions:

Voucher Payment

A method of payment where documentation is used to authorize and record a payment transaction.

Discount Period

The time frame in which a payment made towards a purchase is eligible for a discount, typically to encourage early payments.

Financial Statement

An official document detailing the financial transactions and status of a company, person, or different entity.

Normal Balance

The side (debit or credit) of an account that is normally increased. For assets and expenses, it is the debit side; for liabilities, equity, and revenue, it is the credit side.