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Kerrin co. (sep/dec 19)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Kerrin co. (sep/dec 19)

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by AvatarJohn Moffat.
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  • February 22, 2021 at 3:12 am #611257
    AvatarNoah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    “The cash offer may give rise to agency issues since Danton Co’s founders no longer have a stake in the business even though Kerrin Co’s board is keen to ensure the founders remain in position after the acquisition”

    Sir i honestly don’t understand how this situation can lead to agency issues. Agency issues always existed between management and shareholders, but here there doesn’t seem to me any relation of that sort.

    February 22, 2021 at 8:12 am #611279
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54846
    • ☆☆☆☆☆

    The fact that Danton’s founders are to remain in position (and therefore presumably receive a salary) rather than find themselves out of work might affect their decision as to whether or not to agree to the sale.

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