Hi,
In a leveraged buyout, investors borrow huge sums of money to buy companies, hoping to pay off the debt
by using the company's earnings and to profit richly by the later resale of the companies or their divisions.
• In a leveraged buyout, investors borrow huge sums of money to buy companies, hoping to do two things:
o to pay off the debt with companies’ earning, and
o to profit richly by the later resale of the companies or their divisions.
1. “pay off debt by using…”is unidiomatic. We can say: The company plans to “pay off debt by the end of this year” or “by January 2014”. After “by” we can refer to a time frame. But the correct idiomatic expression to “pay off debt” using something is “pay off debt with…”. Hence we have idiom error here. Consider this sentence from an article published in The Wall Street Journal on Jan 30, 2011:
Under the terms of the new deal, SL Green will pay off the debt with a short-term bridge loan, people said.
https://online.wsj.com/article/SB1000142 ... 54144.html
2. Notice that throughout the sentence, “companies” has been referred to as plural entity – “buy companies”, “resale of the companies or their divisions”. Hence, use of singular “company” in the underlined portion of the sentence is not correct.
POE:
A. by using the company's earnings and to profit: Incorrect as discussed above.
B. by using the companies' earnings and by profiting: Incorrect.
a. Same idiom error as in A.
b. This choice changes the entities in the parallel list and hence distorts the meaning of the sentence. The sentence now means: In a leveraged buyout, investors borrow huge sums of money to buy companies, hoping to pay off the debt :
i. by using the companies’ earnings and
ii. by profiting richly by the later resale of the companies or their divisions. Now this is non-sensical because investors cannot pay debt by making profits through resale.
C. using the companies' earnings and profiting: Incorrect.
a. In absence of preceding commas, “using” and “profiting” non-sensically refer to “debt”.
D. with the company's earnings, profiting: Incorrect. Same parallelism and hence the meaning error as in B.
E. with the companies' earnings and to profit: Correct. This choice uses the correct idiom, the entities in the list are parallel and plural “companies” is consistent throughout the sentence.
1. Identify the logical parallel list in the sentence.
2. The entities in the list must be grammatically as well as logically parallel.
3. Change in the list may lead to change in the logical intended meaning of the sentence.
4. If there is no comma before the verb-ing, then it modifies the immediate preceding noun.
5. Idioms must be correctly worded.
The concepts tested in this sentence have been covered in e-gmat concepts:
1. Level 1 – Parallelism – Identify and Correct
2. Level 1 – Parallelism – Helpful Tips
3. Level 1 – Modifiers – Verb-ing (This concept features in Level 1 Preview Concepts that are available for free. Just register and learn.)
@Shekhar: Apart from the number of “companies”, use of incorrect idiom is another error in choice A.
Hope this helps.
Shraddha
