alleryStart learning →In an MBO backed by private equity, what is the warranty gap?
ABackers bear all risk of defects
BSellers pay for any later defects
CManagers bear defect risk sellers refused
DBanks insure all the defects
Answer & Solution
Correct answer: C. Managers bear defect risk sellers refused
Backers impose on managers the warranties the sellers refused to give, so managers carry the risk of defects.
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