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Explain How a Business Combination Could Occur with No Transfer

question 37

Essay

Explain how a business combination could occur with no transfer of consideration. Using the two scenarios below, explain how PCo could gain control of SCo with no transfer of consideration.
Scenario 1: SCo currently has 1,000,000 common shares outstanding, and PCo owns 300,000.
Scenario 2: SCo currently has 1,000,000 common shares outstanding. Although PCo owns 510,000 of these shares, PCo is unable to exert control due to regulatory restrictions.


Definitions:

Rival in Consumption

A property of a good whereby one person's consumption of the good reduces the ability of another person to consume it.

Excludable

A characteristic of a good or service that allows owners or providers to prevent others from using it without paying.

Concert Hall

A venue specifically designed and equipped for the performance of live music, often with attention to acoustical properties to enhance sound quality.

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Goods that are made scarce by the actions of individuals or institutions, despite the capability of being easily produced in abundance.

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