Explore tens of thousands of sets crafted by our community.
Mergers and Acquisitions Basics
15
Flashcards
0/15
Earnout
A contractual provision that stipulates that the sellers of a company will earn future compensation based on the company achieving certain financial goals.
Merger
The combination of two or more entities to form a new entity, often with the aim of achieving market synergies or efficiencies.
Friendly Takeover
An acquisition where the target company's management and board of directors agree to the takeover by another company.
Anti-trust Laws
Regulations that promote competition by limiting market domination by any single entity, relevant in mergers and acquisitions to prevent the creation of monopolies.
Material Adverse Change (MAC)
A clause in a merger or acquisition contract that allows the acquirer to back out if the target company experiences a significant deterioration in its business.
Hostile Takeover
A type of acquisition where the target company does not want to be acquired and the acquiring company proceeds with the takeover without the target company's approval.
White Knight
A friendly investor or company that acquires a corporation at fair consideration when it is under threat of a hostile takeover.
Synergy
The potential financial benefit that is expected from the combining of two or more companies into a single combined entity.
Leveraged Buyout (LBO)
A type of acquisition where a company is purchased primarily with debt, using the assets of the acquired company as collateral.
Poison Pill
A defensive strategy used by a target company to prevent or discourage hostile takeover attempts.
Due Diligence
A comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential.
Tender Offer
An offer made directly to shareholders to buy their shares at a specified price, typically higher than the market price, in order to take over the company.
Breakup Fee
A penalty set in a merger or acquisition agreement to be paid if the seller backs out of a deal to sell to a purchaser.
Acquisition
The process where one company takes over another company by purchasing a controlling interest in the targeted firm.
Golden Parachute
A pre-negotiated agreement that gives a company's top executives significant financial benefits if they are terminated as a result of a merger or takeover.
© Hypatia.Tech. 2024 All rights reserved.