A going-private transaction in which a large percentage of the money used to buy the outstanding stock is borrowed is called a:
A)tender offer.
B)proxy contest.
C)merger.
D)leveraged buyout.
E)consolidation.

Question

Quizplus · Accepted Answer

A leveraged buyout (LBO) is a going-private transaction in which a large percentage of the money used to buy the outstanding stock is borrowed. In this type of transaction, the acquiring company borrows a significant amount of money to purchase the target company's shares, and the target company's assets are used as collateral for the loan. Tender offers involve making an offer to purchase a certain number of shares of a company's stock at a premium price, while a proxy contest is a battle for control of a company's board of directors. A merger involves the combination of two or more companies into a single entity, while a consolidation involves the merger of two or more companies into a new entity.

A Going-Private Transaction in Which a Large Percentage of the Money