Match the items of List-I with those of List-II and indicate the correct code from the following: Codes:List-I List-II i. Sale of existing firm to the management a. Reverse synergy ii. Financing acquisition with substantial secured borrowings b. Management buyout iii. Firms demerged worth more to other firms c. Reverse capital budgeting iv. Cash inflows on demerger at present at the sacrifice in form of cash out-flow on transfer of division/asset d. Leveraged buyout
i-b, ii-d, iii-a, iv-c
Concept: Corporate restructuring reshapes a firm's ownership or structure through buyouts, demergers and similar deals, and each situation below is named by a specific technique.
Each corporate-restructuring situation in List-I is matched with the technique that describes it. Selling an existing firm to its own management team is a management buyout, so i matches b. Financing an acquisition largely through substantial secured borrowings (debt) is a leveraged buyout, so ii matches d. When firms are worth more separated and sold to others than kept together, splitting them realises reverse synergy, so iii matches a. Taking cash inflows now on a demerger while sacrificing future cash outflow on transferring a division or asset reverses the usual capital-budgeting logic, so it is reverse capital budgeting, and iv matches c.
Example: A conglomerate that sells its loss-making division to a rival for whom it is more valuable is realising reverse synergy, whereas the same firm's managers buying the parent company out is a management buyout.
The keyed anchor i-b (management buyout) and ii-d (leveraged buyout) are decisive: any option that pairs i with a or c, such as i-a, i-c and i-d, must be eliminated, leaving only i-b, ii-d, iii-a, iv-c.
Hence the correct match is i-b, ii-d, iii-a, iv-c.
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