When an acquiring firm bypasses current management and makes a direct offer to purchase shares from the shareholders,it is termed a:
A) Leveraged buy-out
B) Hostile takeover
C) Tender offer
D) Corporate buy-out

Question

Quizplus · Accepted Answer

When an acquiring firm bypasses current management and offers to purchase shares directly from shareholders, it is called a tender offer. In a tender offer, the acquiring firm offers to purchase shares at a price higher than the current market price in order to encourage shareholders to sell. This is often done without the blessings of the target company's management, making it a hostile takeover bid. A leveraged buyout, on the other hand, is a type of acquisition in which a company is purchased using a significant amount of borrowed money. Corporate buy-out is a more general term that can refer to any type of acquisition in which one company buys another.

When an Acquiring Firm Bypasses Current Management and Makes a Direct