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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.
Options
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.
Solution
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.
