Understanding Management Buyouts, Stock Issuance, Mergers, and Tax Shields
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Management Buyouts Explained
Q: Management Buyouts are a form of buyouts. Explain this term.
Management buyouts (MBOs) are acquisitions where the company's existing management team purchases the company. While legally similar to other acquisitions, MBOs differ because the buyers are also the company's managers. This often means a limited due diligence process, as the buyers already possess in-depth knowledge of the company. Sellers are also likely to provide minimal warranties, assuming the management team is more familiar with the company's state than they are.
Stock Issuance and Dividend Calculation
Q: Company XYZ wants to issue more Common Stock of Face Value Rs 12. Next Year the Dividend is expected to be Rs. 3 per share assuming a Dividend
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