After a target firm is acquired, the acquirer may sell off divisions of the target that are not compatible with the acquirer's business. This process is known as
A) bridging.
B) asset stripping.
C) greenmail.
D) none of the above.

Question

Quizplus · Accepted Answer

Selling off divisions of the target that are not compatible with the acquirer's business is known as asset stripping. Bridging refers to the process of linking two separate financial entities, and greenmail refers to the practice of buying a large stake in a company and then threatening to take it over in order to force the company to buy back the shares at a premium price. None of the above options describe the process of selling off incompatible divisions after an acquisition.

After a Target Firm Is Acquired, the Acquirer May Sell