The acquisition of a company in which the buyer borrows most of the purchase price using the firm's own assets as collateral is a:
A)consolidation.
B)leveraged buyout.
C)conglomerate merger.
D)tender offer.

Question

Quizplus · Accepted Answer

The scenario described is a leveraged buyout, where the purchasing company borrows money to buy the target company and uses the assets of the target company as collateral for the loan. Consolidation involves combining two or more companies into a new entity, while a conglomerate merger involves the merger of companies from unrelated industries. A tender offer is a specific type of takeover bid.

The Acquisition of a Company in Which the Buyer Borrows