The management of the Frickel Frontier Freight Company wants to make the company private by borrowing money and using the proceeds of the loan to purchase the shares of the company in the market.Management believes they can increase revenues enough to be able to pay off the loan.What type of loan is management getting?

Question

Quizplus · Accepted Answer

The type of loan management is getting is a leveraged buyout, which involves borrowing money to purchase a controlling interest in a company, using the assets of the company being purchased as collateral. This type of loan is commonly used to make a company private and is often considered high-risk due to the large amount of debt incurred.

The Management of the Frickel Frontier Freight Company Wants to Make