Which one of these best exemplifies "milking the property"?
A)A firm paying a premium to acquire a competitor
B)A firm demanding a premium to be acquired without a proxy fight
C)A firm with high financial distress paying additional dividends
D)An all-equity firm repurchasing shares
E)A firm with high financial distress using expected dividends to repay debt

Question

Quizplus · Accepted Answer

Milking the property refers to the practice of extracting as much value as possible from a business before selling it or divesting its assets. A firm with high financial distress paying additional dividends is an example of milking the property, as it is distributing cash to shareholders instead of investing in the business or paying off debt. This can lead to short-term gains for shareholders but may harm the long-term viability of the company. The other options do not fit this definition as closely.

Which One of These Best Exemplifies "Milking the Property