Which of the Following Is Generally a Way That LBOs

question 14

Multiple Choice

Which of the following is generally a way that LBOs can help a firm realize its potential value?

• A)The synergies created allow for cost savings
• B)The transaction reduces the disparity between a firm's actual and potential share price
• C)The acquisition reduces the likelihood of competition in the industry
• D)The transaction requires debt repayment with future free cash flow leaving management no discretion over the investment of these funds
• E)The buyout gives an opportunity to adjust the management structure and makeup

---

Definitions:

Intangible Assets

Non-physical assets such as trademarks, patents, copyrights, software, and brand recognition that have value for a company.

Nike Swoosh

The Nike Swoosh is a logo designed for the American sportswear company Nike, symbolizing motion and speed.

Fixed Assets

Long-term tangible assets used in the operation of a business, not expected to be converted into cash within a year.

Land Improvements

Enhancements made to a piece of land to increase its value, such as landscaping, fencing, and installing utilities, which are usually depreciated over time.