Question

Assertion (A): Backflip acquisition is a rare case of acquisition in which the purchasing company becomes a subsidiary of the purchased company.

Reason (R): Both the companies approve of the acquisition but the entire process is done by force.

विकल्प

• Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true, but Reason (R) is false.

• Assertion (A) is false, but Reason (R) is true.

Answer 1

Assertion (A) is true, but Reason (R) is false.

Explanation:

The purchasing firm typically chooses a backflip purchase in order to grow and concurrently improve its reputation. An acquired business that outperforms the acquiring business in terms of recognition, structure, and client base As a result, the acquiring firm becomes a subsidiary and the acquired company becomes a holding company.