CPCU 540 Ch. 12 Flashcards
A type of acquisition in which two or more business entities are combined into one
Merger
The purchase of one company’s stock by another company
Acquisition
A combination of two or more business entities into a new entity
Consolidation
The assumption of control by one corporation over another through merger, acquisition, or some other type of transaction
Takeover
A strategy for gaining control of a company by obtaining the voting rights of the target’s shareholders
Proxy contest
A purchase offer made directly to the shareholders of the target, typically at an offer price greater than the current market price
Tender offer
The disposal or sale of part of the company
Divestiture
The creation of a new company from part of an existing company
Spin-off
A combination of two companies in the same line of business
Horizontal acquisition
A combination of two companies involved in related lines of business but at different stages of production
Vertical acquisition
A combination of two companies involved in unrelated lines of business
Conglomerate acquisiton
In the context of acquisitions, a measure of the extend to which a company’s revenues can be increased by combining the company with another entity or entities
Revenue efficiency
In the context of acqusitions, a measure of the extent to which a company’s cost can be reduced by combining the company with another entity or entities
Cost efficiency
The process of examining a company’s operations, finances, and management and verifying material facts that affect company value
Due diligence
A condition that must be met to keep the loan in compliance
Loan covenant
