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Related Flashcards
Related Topics
Cards In This Set
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Strategic Acquirers
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Use acquisitions to extend their current business, to leverage their current capabilities or to diversify into new businesses
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Investment Acquirers
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Do not extend or enhance, they acquire a portfolio of under performing firms and then implement a variety of incentives and control systems to help turn these under performing firms into high-performing firms
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Private equity firms
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Similar to investment, but impose a variety of fees and other charges on the firms they acquire almost immediately
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Common way a firm can accomplish its vertical integration and diversification objectives?
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Mergers and acquisitions
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Acquisition
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A firm engages in acquisition when it purchases a second firm
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Ways to purchase an acquisition
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Use cash generated from ongoing business, go into debt to purchase, use own equity to purchase, or a a mix
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How much can an acquiring firm purchase?
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All of its assets, a majority (51%), or a controlling share
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Controlling Share
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Enough assets so that the acquiring firm is able to make all the mgmt and strategic decisions in the target firm
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Friendly vs. Unfriendly Acquisitions(Hostile Takeovers)
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When the mgmt wants the firm to be acqrd, vs when mgmt doesn't want the firm to be acqrd.
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How are firms acquired otherwise?
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Through direct negotiations(privately held or closely held), publicly announce it is willing to purchase the outstanding shares for a particular price
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Privately held
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When it has not sold shares on the public market
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Closely held
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When it has not sold very many share on the public stock market
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Acquisition premium
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The difference between the current market price of a target firm's shares and the price a potential acquirer offers to pay for those shares
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What is the approach to purchasing a firm through an acquisition premium called?
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Tender offer
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Merger
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When the assets of two similar-sized firms are combined
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