C Co. currently owns 80% of D Co. and several other subsidiaries. C Co. is interested in gaining control of H Co. Why might C Co. allow D Co. to acquire H Co., rather than purchasing H Co. directly?

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Danji David · Accepted Answer

Final Answer : Indirect control (such as a father-son-grandson structure, as proposed by C Co.) may be used to group subsidiaries by product line, geographic location, or other criteria. The use of indirect control may establish clearer and shorter lines of communication for day-to-day operations and improve responsibility reporting.

C Co. currently owns 80% of D Co. and several other subsidiaries. C Co. is interested in gaining control of H Co. Why might C Co. allow D Co. to acquire H Co., rather than purchasing H Co. directly?

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