Question: How does a toehold help overcome the free rider problem?ion liststion 1 stion 2 ( Select the best choice. ) A . Free riders usually
How does a toehold help overcome the free rider problem?ion liststion stion Select the best choice. A Free riders usually acquire a toehold in order to give an incentive for an acquirer to take over the remainder of the company and provide valueadded improvements. B Since the free riders gain the full amount of the value improvement on the shares acquired as a toehold, the free riders are likely to sell their shares to the acquirer, allowing the takeover to go forward. C Since the acquirer gains the full amount of the value improvement on the shares acquired as a toehold, a toehold provides an incentive to undertake the acquisition, even if the acquirer must pay a pric equal to the withimprovement value for the rest of the shares. DOnce the acquirer has a toehold, free riders no longer can make as much money as they would have and are more likely to tender their shares to the acquirer:
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
