Question

A business combination in which the acquired company's assets and liabilities are combined with those of the acquiring company into a single entity is defined as:

A) Stock acquisition
B) Leveraged buyout
C) Statutory Merger
D) Reverse statutory rollup

Answer 1

A statutory merger is a business combination where the acquired company's assets and liabilities are amalgamated with those of the acquiring company into a single entity.

Step-by-step explanation:

The type of business combination in which the acquired company's assets and liabilities are combined with those of the acquiring company into a single entity is known as a statutory merger. This type of merger involves the absorbing of one company by another, where the former ceases to exist as a separate business entity, and its assets and liabilities become part of the acquiring company.

In contrast, a stock acquisition occurs when one company purchases a significant amount of another company's shares to gain control, yet both companies may continue to exist as separate legal entities. A leveraged buyout involves the acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition. Lastly, a reverse statutory rollup is a type of business reorganization that involves combining several small companies into a public company, which is the reverse of the typical merger pattern.