Concept Questions

25.1a What is a merger? How does a merger differ from other acquisition forms? 25.1b What is a takeover?

going-private transactions

Transactions in which all publicly owned stock in a firm is replaced with complete equity ownership by a private group.

leveraged buyouts (LBOs)

Going-private transactions in which a large percentage of the money used to buy the stock is borrowed. Oftentimes, incumbent management is involved.

2Having control may be defined as having a majority vote on the board of directors.

Ross et al.: Fundamentals of Corporate Finance, Sixth Edition, Alternate Edition

VIII. Topics in Corporate Finance

25. Mergers and Acquisitions

© The McGraw-Hill Companies, 2002

PART EIGHT Topics in Corporate Finance

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