An acquisition occurs when one company takes over controlling interest in another company. This strategy is often employed to achieve specific business objectives such as expanding market share, gaining new technologies, or reducing competition.
Asset stripping involves acquiring a company whose share price is undervalued relative to its asset value, selling its assets for profit, typically at the expense of other stakeholders.
A fairness opinion is a professional evaluation provided by an independent appraiser or investment banker, assessing the fairness of the price proposed in corporate transactions such as mergers, takeovers, or leveraged buyouts. This document aims to ensure that the offered price is equitable and serves the best interests of the shareholders.
A provision in an executive's employment contract that promises substantial severance packages if the individual is terminated or chooses to leave following a change in company ownership or a takeover.
A leveraged buyout (LBO) is a financial transaction where a company is acquired primarily using borrowed funds, with the target company's assets often used as collateral for the loans.
Penny shares are securities with very low market prices traded on a stock exchange, often appealing to small investors due to the potential for significant holdings at a low cost.
A potential target that has not yet been approached by an acquirer. Such a company usually has particularly attractive features, such as a large amount of cash or under-valued real estate or other assets.
A takeover represents a change in the controlling interest of a corporation. This can occur through friendly acquisition and merger, or via an unfriendly bid that might be contested by the target company's management employing defensive strategies known as shark repellent techniques.
Target price refers to the projected price level of a financial security, as projected by an analyst or determined by an acquirer in various financial and business contexts.
An undervalued security is one that is selling below its liquidation value or the market value that analysts believe it deserves. Factors for undervaluation may include an unfavored industry, lack of company recognition, or an erratic earnings history.
