A(n) ________________ occurs when the management of the target company purchases a controlling interest in that company and the company incurs a significant amount of debt as a result.
A)greenmail
B)statutory merger
C)poison pill
D)leveraged buyout

Question

A(n) ________________ occurs when the management of the target company purchases a controlling interest in that company and the company incurs a significant amount of debt as a result.​
A)​greenmail
B)​statutory merger
C)​poison pill
D)​leveraged buyout

Quizplus · Accepted Answer

A leveraged buyout (LBO) occurs when the management of the target company purchases a controlling interest in that company and the company incurs a significant amount of debt as a result. The debt is often used to finance the purchase of the company's own stock, which in turn reduces the number of outstanding shares and increases the value of each share. This allows the management team to gain control of the company without investing a significant amount of their own money.

A(n) ________________ Occurs When the Management of the Target Company