Mergers & acquisitions

Mergers & acquisitions

Referring to the aspect of corporate strategy, finance and management that deals with the buying, selling or combining of different companies that can assist a growing company to grow rapidly without having to create another business entity.

Industry: Banking; Business services

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Mergers & acquisitions

forward triangular merger

Banking; Mergers & acquisitions

The acquisition subsidiary being merged with the target and the acquiring subsidiary surviving.

fraudulent conveyance

Banking; Mergers & acquisitions

Laws governing the rights of shareholders if the new company created following an acquisition or LBO is inadequately capitalized to remain viable.

management preferences

Banking; Mergers & acquisitions

The boundaries or limits that senior managers of the acquiring firm place on the acquisition process.

managerialism theory

Banking; Mergers & acquisitions

A theory espousing that managers acquire companies to increase the acquirer’s size and their own remuneration.

marketability discount

Banking; Mergers & acquisitions

See liquidity discount. Marketability risk The risk associated with an illiquid market for the specific stock. Also called liquidity risk.

market power

Banking; Mergers & acquisitions

A situation in which the merger of two firms enables the resulting combination to profitably maintain prices above competitive levels for a significant period.

market power hypothesis

Banking; Mergers & acquisitions

A theory that firms merge to gain greater control over pricing. Maximum offer price The sum of the minimum price plus the present value of net synergy.