If privatization of a firm occurs through a leveraged buyout (or a merger) the firm is MORE likely to be interested in
A) Increasing advertising expenditures
B) Market share investments
C) Profits and cash flow to pay down debt
D) Plowing money into market share gains
E) Increasing promotion expenditures

Question

Quizplus · Accepted Answer

In a leveraged buyout or a merger where privatization occurs, the firm is more likely to focus on generating profits and cash flow to manage and pay down the significant debt usually incurred in the process. This financial strategy prioritizes immediate cash flow over longer-term investments like advertising, market share investments, or increasing promotion expenditures.

If Privatization of a Firm Occurs Through a Leveraged Buyout