When a ﬁrm acquirers all of another ﬁrm's assets:
A)It circumvents getting approval of the selling ﬁrm's shareholders.
B)It often faces a holdout by minority shareholders.
C)Both (i) and (ii) are correct.
D)Both (i) and (ii) are incorrect.
E)Firms cannot directly purchase each others assets.

Question

Quizplus · Accepted Answer

When a firm acquires all of another firm's assets, it is not buying the company itself, but only the assets. Therefore, there is no need to get approval from the selling firm's shareholders. Additionally, there should be no holdout by minority shareholders because they are not shareholders of the selling firm anymore. Choice E is incorrect because firms can purchase each other's assets.

When a ﬁRm Acquirers All of Another ﬁRm's Assets