When a firm's management decides to take on significant debt in order to take the firm private it is called a:
A)Circular bid
B)Tender bid
C)Management buy-out (MBO)
D)Hostile takeover

Question

Quizplus · Accepted Answer

When a firm's management decides to take on significant debt in order to take the firm private, it is referred to as a management buy-out (MBO). In an MBO, the current management team works with outside investors or lenders to purchase all outstanding shares of the company and take it private. This allows the management team to have more control over the company's operations and strategy.

When a Firm's Management Decides to Take on Significant Debt