When two organizations of about equal size unite to form one enterprise, which of these occurs?
A) hostile takeover
B) merger
C) acquisition
D) LBO
E) divestiture

Question

Quizplus · Accepted Answer

A merger is the coming together of two organizations of roughly equal size to form a new, combined company. In a merger, both companies' stocks are surrendered, and in return, new stock is issued for the combined entity. This is different from an acquisition, where one company acquires another, and the acquired company's stocks are no longer traded on the stock exchange. A hostile takeover is when one company takes control of another company without the approval of the target company's board of directors. An LBO is a leveraged buyout, where a company is acquired using a significant amount of debt financing. Divestiture is the opposite of an acquisition, where a company sells or spins off a division or subsidiary.

When Two Organizations of About Equal Size Unite to Form