business combos Flashcards
A company combines with another, unrelated company in order to diversify
Conglomerate merger
A company grows by investing in research and development or marketing
Internal expansion
The excess of the purchase price of a company over the fair value of stock acquired
Takeover premium
A takeover defense which includes issuing stock rights to existing shareholders so
they may buy more stock at a price lower than market share
Poison pill
A combination where two existing companies join to make a third company
Statutory consolidation
All revenue, expenses, gains and losses are included
Comprehensive income
A combination where a company buys one or more of its competitors
Horizontal integration
Purchase of a company by its managers and third-party investors, often using deb
Leveraged buyout
The excess price paid which is attributed to a company’s future earnings potential
Goodwill
A combination where the boards of two companies mutually agree to the
acquisition
Friendly combination
Encouraging a third firm to buy a company that is the target of an unfriendly
combination
White knight
A means of increasing the size of a company by acquiring another company
External expansion
Emphasizes control of the whole by a single management
Economic entity concept
The purchase of one company by another where the two companies continue to be
separate legal entities
Stock acquisition
A combination where the management of the target company resists the acquisition
Hostile combination
A combination where a company buys its suppliers and/or its customers
Vertical integration
A combination where one company buys and absorbs another company
Statutory merger
