A consolidation involves combining two or more companies into a new entity, requiring approval from both corporations' board of directors and shareholders. Unlike a merger, where one company absorbs another, a consolidation results in the creation of a completely new entity. It is not always illegal, nor does it have the same result as a merger, and it is not the most typical form of business combination used today.

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A Consolidation

Question 41

Multiple Choice

A consolidation:

A) has precisely the same result as a merger.
B) requires the assent of both corporations' board of directors and shareholders.
C) is always illegal (in contrast to mergers, which are legal under some state laws) .
D) is the most typical form of business combination used today.

Correct Answer: