Adam is a major stockholder in Precision Transmission Services (PTS), a nationwide network of transmission repair shops founded by his father. Currently, PTS stock is sold on the open market, but Adam has talked to several relatives about his desire to get all of the PTS stock back in his family's hands. Adam is interested in _______________________________.
A) taking the firm private
B) a hostile takeover of the firm
C) converting the firm to a general partnership
D) forming a master limited partnership

Question

Quizplus · Accepted Answer

Adam's desire to get all the PTS stock back in his family's hands indicates that he wants to have more control over the firm. Taking the firm private would allow him to do so as the company's shares would no longer be traded on the open market, and only Adam and his family members would own the company's stock. A hostile takeover involves acquiring a majority of the company's shares without the approval of the board of directors or management, which may not be feasible or desirable if Adam already owns a significant portion of the company. Converting the firm to a general partnership or forming a master limited partnership are not relevant options in this scenario.

Adam Is a Major Stockholder in Precision Transmission Services (PTS)