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19 Cards in this Set

  • Front
  • Back
Merger
A type of acquisition in which two or more business entities are combined into one
Acquisition
The purchase of one company's stock by another company
Consolidation
A combination of two or more business entities into a new entity
Takeover
The change in the control of a company through merger, acquisition, or some other type of transaction
Proxy contest
A strategy for gaining control of a company by obtaining the voting rights of the target's shareholders
Tender offer
A purchase offer made directly to the shareholders of the target, typically at an offer price greater than the current market price.
Divestiture
The disposal or sale of part of a company
Spin-off
The creation of a new company from part of an existing company
Horizontal acquisition
A combination of two companies in the same line of business
Vertical acquisition
A combination of two companies involved in related lines of business but a different stages of production
Conglomerate acquisition
A combination of two companies involved in unrelated lines of business
Revenue efficiency
In the context of acquisitons, a measure of the extent to which a company's revenues can be increased by combining the company with another entity or entities
Cost efficiency
In the context of acquisitions, a measure of the extent to which a company's costs can be reduced by combining the company with another entity or entities
Due diligence
The process of examining a company's operations, finances, and management and verifying material facts that affect company value.
Loan covenant
A condition that must be met to keep the loan in compliance
Purchase method
The accounting method used in an acquisiton under which the assets and liabilities of the acquired company are recorded at their fair market value and the excess of the purchase price over the net worth is recorded as goodwill
Golden parachute
a provision in an executive's employment contract that specifies that he or she will receive a large payoff, such a severance pay, immediate vesting of stock options, and enhanced retirement benefits if his/her contract is terminated after company is acquired.
Super majority
a high percentage of voting shareholders - delays the bidder's completion of a deal and gives the minority interest greater power
Staggered board
A company can require that a minority fraction such a one-third, of the board memebers is elected each year. This rotating board mmebership makes it more difficult for a bidder to obtain enough board votes to approve an acquisition or revoke defensive amendments to the bylaws