Autos R Us and Pre-owned Inc represent used car dealers that compete in the same city. These competitors each invest $15 million to form a new, jointly owned company, Real Value Inc, that will sell cars in a nearby city. The new firm is best described by which of the following terms:

Question

Quizplus · Accepted Answer

The new company is a joint venture because Autos R Us and Pre-owned Inc are collaborating on a new venture together. A merger would involve the two companies combining into one entity, an acquisition would involve one company buying out the other, a leveraged buyout would involve one company using debt to buy out another company, and a consolidation would involve combining the financial statements of the two companies into one set of financial statements.

Autos R Us and Pre-Owned Inc Represent Used Car Dealers