B5-M5 The Economic Effect of Significant Transactions Flashcards
what is a horizontal merger?
two companies operate in the same industry merge together
What is a vertical merger?
a company merges with one of its suppliers
what is a circular combination?
two companies appear to be in relatively unrelated industries
what is sell-off?
A sell-off allows a parent company to raise cash while separating itself from its sub so that it can focus on its core business
what is equity carve-out?
an equity carve-out would allow a parent company to generate cash for the company through sale of its sub’s stock. This is typically used when the parent wants to retain control of its new sub
what is a diagonal combination?
involves integrating another company that provides ancillary (necessary support to primary activities) services
what is a spin off?
Keep the not doing well segment and create a new company that will receive a capital infusion. It represents a fresh start for the business
