In a ____ form of business combination, a parent-subsidiary relationship exists between the acquiring and acquired companies.
A) leveraged buyout
B) holding company
C) consolidation
D) leveraged buyout or consolidation

Question

Quizplus · Accepted Answer

A holding company is a form of business combination where one company (the holding company) owns a controlling interest in another company (the subsidiary). The parent-subsidiary relationship exists between the two companies, but they may continue to operate as separate entities with their own management teams. A leveraged buyout involves the purchase of a company using a significant amount of borrowed funds, often leaving the acquiring company heavily indebted. Consolidation involves the merger of two or more companies into a single entity, with a new name and management structure. While a parent-subsidiary relationship may exist after consolidation, it is not the defining characteristic of this type of business combination.

In a ____ Form of Business Combination, a Parent-Subsidiary Relationship