When the existing management of a firm is involved in a going-private transaction financed primarily with borrowed funds, the transaction is frequently referred to as a:
A) Joint venture.
B) Strategic buyout.
C) Vertical buyout.
D) Management buyout.
E) Horizontal acquisition.

Question

Quizplus · Accepted Answer

When the existing management of a firm is involved in a going-private transaction that is financed primarily with borrowed funds, it is referred to as a Management Buyout (MBO). This involves the company's current managers acquiring a significant portion, if not all, of the company's assets and operations.

When the Existing Management of a Firm Is Involved in a Going-Private