M&A Part I Flashcards

1
Q

Exchange Offer

A

exchange one type of security for another e.g. exchanging common stock for preferred

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2
Q

Restructuring

A

Actions related to a firm’s investment and financial policy, assets may be sold or dividends paid

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3
Q

Acquisition

A

One company takes over controlling interest in another company, acquirers usually pay more than market price for an acquisition

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4
Q

Golden Parachute

A

Separation agreement that provides payment to a corporate exec in the event they loose their job

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5
Q

Greenmail

A

Repurchase by a corporation of the stockholdings of a raider through an above market offer. Raider stops takeover efforts.

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6
Q

In Play

A

High chance a corporation will be taken over by one entity or another

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7
Q

LBO

A

Leveraged buyout

takeover of a company using borrowed funds, target company’s assets serve as security for acquirer.

Acquired company’s CFs are used to repay

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8
Q

Merger

A

Combination of 2 or more companies through different means (e.g. pooling of interests) and is classified by economic functions (vertical, horizontal, etc).

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9
Q

Pac-Man Defense

A

Target defends itself from acquisition, by making a counter-tender offer for the aggressor

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10
Q

Poison Pill

A

Right issued to targets stockholders of target, that are contingent on acquirer taking a certain % of company’s stock. Rights make a takeover more expensive for a target.

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11
Q

Raider

A

group / individual that acquires a block of stock in a target company with an eye to making a tender offer

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12
Q

Risk Arbritrage

A

Speculation by individuals / firms on whether or not mergers / transactions will take place

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13
Q

Scorched Earth Policy

A

Target makes it self unattractive to acquirer e.g. sells off more attractive parts of their business

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14
Q

Shark Repellent

A

A measure undertaken by a corporation to discourage unwanted takeover attempts. Also called a porcupine provisions

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15
Q

Shark Repellent Examples

A

Fair price provision

Golden parachute

Defensive merger

Staggered BOD

Supermajority Provision

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16
Q

Takeover

A

change in the controlling interest of a corporation, a friendly or unfriendly acquisition

hostile takeovers come via public tenders

17
Q

Tender Offer

A

An offer to buy all or part of a firm over a stated period usually for the purpose of takeover

18
Q

2 Tier Tender Offer

A

An offer to buy part of a targets firm stock at a stated price in cash and buy the balance in a less attractive way such as securities

19
Q

White Knight

A

An outside company the target solicits to avoid the original acquirer