After an Exchange of Shares in a Business Combination, Each

question 55

Multiple Choice

After an exchange of shares in a business combination, each group of shareholders held 50% of the voting rights. Which of the following factors would be the strongest to be considered in determining the acquirer?

• A)Composition of the board of directors.
• B)If there are material transactions between the combining companies.
• C)Which company initiated the combination.
• D)Head office location.

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Definitions:

Incumbent Management

The current team or individual responsible for managing and making key decisions in an organization.

Diversification

An investment strategy that reduces risk by allocating investments among various financial instruments, industries, or other categories.

Corporate Governance

The system of rules, practices, and processes by which a firm is directed and controlled.

Merger

The combination of two or more companies into one, where one corporation is absorbed into another or they form a new entity.