Match the items of List – I with those of List – II and indicate the correct code from the following :…
Selling an existing firm or division to its internal managers is a management buyout (b), financing an acquisition primarily with borrowed debt is a leveraged buyout (d), a…
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Match the items of List – I with those of List – II and indicate the correct code from the following :
List – I
List – II i. Sale of existing firm to the management a. Reverse synergy ii. Financing acquisition with substantial secured borrowings b. Management buyout iii. Firms demerged worth more to other firms c. Reverse capital budgeting iv. Cash inflows on demerger at present at the sacrifice in form of cash out-flow on transfer of division/asset d. Leveraged buyout
Answer and explanation
Correct answer C
Selling an existing firm or division to its internal managers is a management buyout (b), financing an acquisition primarily with borrowed debt is a leveraged buyout (d), a demerger where separated parts are worth more than the combined entity reflects reverse synergy (a), and receiving present cash inflows from divesting an asset by sacrificing future cash flows is reverse capital budgeting (c).
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UGC NET Management