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Fashion Mergers and Acquisitions
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Flashcards
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Leveraged Buyout (LBO)
Acquiring a company using a significant amount of borrowed money. In fashion M&A, the assets of the company being acquired might be used as collateral for the loans needed to finance the deal.
Deal Sourcing
The process by which potential M&A deals are identified. In the fashion industry, it may involve seeking out brands that align with the company’s strategic vision or have valuable intellectual property.
Horizontal Integration
Acquisition of a business operating at the same level of the value chain in an industry. For fashion companies, this can mean acquiring a competitor to expand market share and consolidate the sector.
Due Diligence
The process of investigating a business before signing a contract, especially in auditing the financial records and assessing brand value. Essential for informed decision-making in fashion M&A to avoid risks and unexpected liabilities.
Hostile Takeover
An acquisition in which the target company does not wish to be acquired. This is less common in the fashion industry but can occur when a larger company sees strategic value in acquiring a niche brand against their wishes.
Conglomeration
The process of a company expanding into unrelated business areas. In fashion, a conglomerate might own various brands across different market segments, thereby diversifying its investments and reducing risk.
Synergy
Synergy refers to the potential financial benefit achieved through the combining of companies. In the fashion sector, it can mean cross-brand promotion, expanded distribution networks, or shared technologies.
Acquisition Premium
This is the additional cost above the market value of the shares that a company pays to acquire another company. In fashion, it reflects the brand's reputation, future growth prospects, and exclusive designs or technologies.
Vertical Integration
When a fashion company acquires a company at a different stage of the supply chain, it controls more of the production process. This can lead to increased efficiency and control over the product quality and cost.
Cultural Fit
The alignment of company cultures in a merger or acquisition. Especially important in the fashion industry where brand identity and values can significantly influence customer loyalty and employee satisfaction.
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