A forward triangular merger is the most commonly used form of reorganization for tax-free stock acquisitions in which the form of payment is acquirer stock. It involves three parties: the acquiring firm, the target firm, and a shell subsidiary of the target firm.

Question

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In a forward triangular merger, the acquiring firm creates a shell subsidiary, and it is this subsidiary that merges with the target firm, not a shell subsidiary of the target firm.

A Forward Triangular Merger Is the Most Commonly Used Form