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:

Bureaucratic Approach

A method of organization emphasizing a structured hierarchy, strict rules, and a clear division of responsibilities to achieve efficiency.

Scientific Approach

A methodical process used for investigating phenomena, acquiring new knowledge, or correcting and integrating previous knowledge, based on empirical or measurable evidence.

Theory X

A management theory assuming employees are inherently lazy and will avoid work if they can, necessitating control and coercion by managers.

Theory Y

A management concept suggesting that employees are inherently motivated to work and will show high levels of creativity and responsibility if given the chance.