Use the following statements to answer the question:
I.The holdup problem consists of small shareholders asking for an excessive price to tender their shares in case of amalgamation.
II.Sweetening the deal results in increasing the price for the remaining shares to encourage the holders to sell their shares.
A)I and II are correct.
B)I and II are incorrect.
C)I is correct and II is incorrect.
D)I is incorrect and II is correct.

Question

Quizplus · Accepted Answer

Both statements are correct. The holdup problem refers to shareholders asking for an excessive price for their shares during mergers or acquisitions, which can cause a deal to fail. When companies sweeten the deal, they increase the price for the remaining shares to encourage those holders to sell their shares and avoid the holdup problem.

Use the Following Statements to Answer the Question