If a bidding ﬁrm wishes to bypass the board of directors of the target ﬁrm and deal directly with the shareholders of the target ﬁrm, the bidding ﬁrm should attempt to acquire the target ﬁrm via a:
A) Consolidation.
B) Merger.
C) Stock acquisition.
D) Leveraged buyout.
E) Going-private transaction.

Question

Quizplus · Accepted Answer

A stock acquisition allows the bidding firm to directly acquire shares from the shareholders of the target firm without the involvement of the board of directors. This is also known as a hostile takeover. Consolidation and merger both involve the combination of two firms, but they typically require the approval of the board of directors. A leveraged buyout and going-private transaction involve taking a public company private and are not necessarily relevant to this scenario.

If a Bidding ﬁRm Wishes to Bypass the Board of Directors