What is the term for when a public company becomes a private corporation?
A) share buyback
B) private placement
C) leveraged buyout
D) hostile takeover

Question

Quizplus · Accepted Answer

When a public company becomes a private corporation, it is typically done through a leveraged buyout, where a group of private investors use a combination of their own funds and borrowed money to purchase all of the outstanding shares of the public company. This allows them to take control of the company and make decisions without the scrutiny and regulations of being a publicly traded company. Share buybacks and private placements do not result in the company becoming private, while a hostile takeover is a different process where the acquiring company does not require the consent of the target company shareholders.

What Is the Term for When a Public Company Becomes