Chapter 10 Flashcards
acquisition
when a firm purchases another firm
controlling share
when you own enough shares to control all of the management decisions
friendly acquistions
when the management of the target firm wants the firm to be acquired
unfriendly acquisitions
occur when the management of the target firm does not want to be acquired
hostile takeovers
when a tender offer is given to the public to buy the company shares
acquisition premium
difference between market value and the price of the target firm’s shares
merger
when assets of two similar firms are combined
current market value
price of shares times the number of shares
vertical merger
this happens when a firm vertically integrates forwards or backwards when it merges
horizontal merger
this happens when a firm buys a former competitor
product extension merger
when a firm acquires other complementary products
market extension merger
merging to get into new geographic markets
conglomerate merger
when a firm is not a vertical, horizontal, product extension, or market extension
technical economies
in marketing, production, and similar forms of relatedness
pecuniary economies
market power
diversification economies
in portfolio management and risk reduction
free cash flow
left over cash flow after all of the other business functions have been funded
managerial hubris
management thinking that they can manage the resources of another firm, better than the target firm can
market for corporate control
the market that is created when multiple firms actively seek to acquire one or several firms
thinly traded market
market where there are only a small number of buyers and sellers, where info is not widely known
poison pills
any of a variety of actions that a target firm takes to make the price really high
tender offers
direct offers made to owners of stock
shark repellant
things that make it hard for a firm to be acquired
white knight
another bidding firm that agrees to buy a target firm in the place of another firm
