What describes a "liability management transaction"?

A liability management transaction primarily involves actions taken by a company to manage its existing debt levels effectively. This can include refinancing debt, exchanging existing debt for new debt with different terms, or repurchasing debt in the open market to reduce obligations. By focusing on managing and optimizing debt, organizations can significantly improve their cash flow, ensuring they can meet operational needs and finance future growth.

Strategically managing debt can also lead to lowered interest expenses and extended payment terms, thus enhancing the overall financial stability of the company. Therefore, option B accurately captures the essence of what a liability management transaction entails.

While reducing employee liabilities is important, this aspect falls outside the traditional scope of liability management in the context of corporate finance, as employee liabilities revolve more around workforce management rather than debt. Transactions aimed at acquiring new liabilities or requiring immediate repayment of outstanding debts do not embody the proactive and strategic nature of a liability management transaction, which seeks to optimize existing obligations instead.