Series 79 practice questionmediumMerger Consideration
Why might a seller accept stock consideration instead of all cash?
- ATo eliminate SEC disclosure obligations
- BTo participate in future upside of the combined company✓ Correct answer
- CTo avoid any dilution
- DTo prevent shareholder voting requirements
Explanation
Why B — To participate in future upside of the combined company
To participate in future upside of the combined company Stock consideration lets sellers share in post-closing performance and can help bridge valuation gaps. It also shifts some market risk to the seller.
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