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17 July, 07:36

When Beta Company bought Gamma Company, Beta sold off about 30% of Gamma's assets because they did not need them. Beta kept only the part of Gamma that is counter-cyclical to Beta's other business. Why did they do this?

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  1. 17 July, 08:57
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    To prevent a negative effect on their other businesses, resulting in loss of control of assets.

    Explanation:

    Counter-cyclical assets are assets that thrives in a period where most other businesses struggle.

    For example, Gamma Company would be considered counter-cyclical, if it provides services that are unavailable in beta's other businesses during certain periods or cycle.

    To prevent loss of control Beta company decides to retain this part of Gamma company.
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