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?

Question

Business

Corinne Doyle

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?

+1

Answers (1)

Know the Answer?

Paris · Answer 1

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.