Horizontal Acquisition: Definition, Process, And Real-Life Examples

What is Horizontal Acquisition? Horizontal acquisitions are commonly seen in industries where consolidation is prevalent, such as technology, retail, and pharmaceuticals. By acquiring a competitor, companies can achieve economies of scale, reduce costs, and enhance their overall market position. Benefits of Horizontal Acquisition There are several benefits associated with horizontal …

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Understanding Buyouts: Types and Examples

Private Equity Buyouts A private equity buyout is a type of buyout transaction in which a private equity firm acquires a controlling stake in a company. Private equity firms typically raise funds from institutional investors, such as pension funds and endowments, and use these funds to invest in companies with …

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Tender in Finance: Definition and Examples

Tender in Finance: Definition and Examples A tender in finance refers to the process of inviting bids from potential buyers or investors for the purchase of a particular financial instrument or asset. It is commonly used in various financial transactions, such as mergers and acquisitions, government bond issuances, and stock …

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Takeover Definition: Funding and Example of a Takeover

What is Takeover? A takeover refers to the acquisition of one company by another, resulting in the acquiring company gaining control over the target company’s operations and assets. It is a strategic move often undertaken by companies to expand their market share, diversify their product offerings, or gain access to …

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Subsidiary Company Definition Examples Pros Cons

What is a Subsidiary Company? Subsidiary companies are separate legal entities from their parent companies, meaning they have their own assets, liabilities, and legal obligations. However, they operate under the control and direction of the parent company, which can influence their strategic decisions and financial management. Subsidiary companies can be …

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Stalking Horse Bid Definition How It Works Example

What is a Stalking Horse Bid? A stalking horse bid is a term used in the context of mergers and acquisitions (M&A) to describe a bid that is made by a potential buyer to set a minimum price for an asset or company that is being sold in a bankruptcy …

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Reverse Takeover (RTO): Definition and How It Works

What is Reverse Takeover (RTO)? A reverse takeover (RTO) is a type of merger or acquisition in which a private company takes over a publicly-traded company. Unlike a traditional takeover, where a larger company acquires a smaller one, in an RTO, the smaller private company becomes the controlling entity of …

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Repackaging in Private Equity: A Comprehensive Guide

Repackaging in Private Equity: A Comprehensive Guide Repackaging in private equity is a strategic process that involves restructuring and reorganizing the assets of a company to enhance its value and profitability. It is a complex and multifaceted approach that requires careful analysis and planning. Repackaging in private equity involves various …

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Pro Forma Financial Statements: Definition and Guide to Creating Pro Forma Statements

Pro Forma Financial Statements: Definition Pro forma financial statements are projected financial statements that are created based on assumptions and hypothetical scenarios. These statements provide an estimate of a company’s financial performance and position in the future, typically for a specific period of time. Pro forma statements are used by …

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Private Company: Types, Pros and Cons

Types of Private Companies Private companies are a popular form of business organization that are not publicly traded on the stock market. They are owned and operated by individuals or a small group of people, and their shares are not available for purchase by the general public. There are several …

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Poison Pill: Defense Strategy and Shareholder Rights Plan

Poison Pill: Defense Strategy A poison pill is a defense strategy used by companies to deter hostile takeovers. It is designed to make the acquisition of a company’s shares unattractive or prohibitively expensive for the acquiring party. What is a Poison Pill? How Does it Work? When a hostile takeover …

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Pac-Man Defense: Understanding, Mechanics, Real-Life Cases

Mechanics of the Pac-Man Defense The Pac-Man Defense is a strategic maneuver employed by companies facing hostile takeover attempts. It involves the target company turning the tables on the acquiring company by making a counteroffer to acquire the acquirer. This unexpected move can disrupt the acquirer’s plans and potentially deter …

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Novation in Contract Law: Types, Uses, and Example

Novation in Contract Law: Types, Uses, and Example [M&A catname] Novation is a concept in contract law that refers to the substitution of a new party or obligation in place of an existing one. This legal mechanism is commonly used in mergers and acquisitions (M&A) transactions to transfer rights and …

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Negative Goodwill: Definition, Examples, and Accounting

What is Negative Goodwill? This situation can arise due to various factors, such as distressed sales, economic downturns, or a lack of competition in the market. Negative goodwill is often seen as a favorable outcome for the acquiring company, as it allows them to acquire assets at a discounted price. …

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Minority Interest Definition Types and Examples

What is Minority Interest? Minority interest refers to the ownership or equity stake in a company that is held by individuals or entities who do not have a controlling interest in the company. In other words, it represents the ownership share of the company that is held by minority shareholders. …

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Mergers and Acquisitions: A Comprehensive Guide to Types, Structures, and Valuations

Mergers and Acquisitions: A Comprehensive Guide Are you interested in learning more about mergers and acquisitions? Look no further! Our comprehensive guide covers everything you need to know about this exciting field. Whether you’re a business owner looking to expand through acquisition or an investor wanting to understand the intricacies …

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Merger: Definition, How It Works, Types, and Examples

Merger: Definition, How It Works, Types, and Examples A merger is a strategic business combination where two or more companies join together to form a single entity. It is a common practice in the corporate world, often driven by the desire to increase market share, gain competitive advantage, or achieve …

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Merger Arbitrage: Definition and How It Works to Manage Risk

What is Merger Arbitrage? Merger arbitrage is an investment strategy that involves profiting from the price discrepancies that occur during a merger or acquisition (M&A) process. It is a type of event-driven investing that aims to capture the spread between the current market price of a target company and the …

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Leveraged Buyout (LBO) Definition – How It Works and Example

Leveraged Buyout (LBO) Definition A leveraged buyout (LBO) is a financial transaction in which a company is acquired using a significant amount of borrowed money to meet the cost of acquisition. In an LBO, the assets of the target company are often used as collateral for the loans taken to …

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Kamikaze Defense Explained: How It Works and Types

Kamikaze Defense Explained Kamikaze defense is a strategy used in mergers and acquisitions (M&A) transactions to deter hostile takeovers. It involves the target company taking extreme measures to make itself unattractive or even financially unviable to the acquiring company. This defensive strategy gets its name from the kamikaze pilots of …

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Just Say No Defense: The Meaning, Examining Examples, And Addressing Criticism

Exploring the Concept and Significance of Just Say No Defense in M&A The Just Say No Defense is a strategy employed by target companies to resist hostile takeover attempts. It involves the target company’s board of directors rejecting the acquisition offer outright, without engaging in negotiations or discussions with the …

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Inorganic Growth: Definition, Arising, Methods, and Example

Inorganic Growth: Definition Inorganic growth refers to the expansion of a company through external means, such as mergers and acquisitions (M&A), rather than through internal growth strategies. It involves the integration of another company or its assets into the existing business structure, allowing the acquiring company to gain access to …

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Hostile Takeover Explained: What It Is, How It Works, Examples

What is a Hostile Takeover? A hostile takeover is a type of corporate acquisition in which the acquiring company takes over the target company against the wishes of its management and board of directors. Unlike a friendly takeover, where the target company agrees to be acquired, a hostile takeover is …

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Hostile Bid: The Mechanics And Examining Real-Life Examples

Mechanics of Hostile Bids At its core, a hostile bid refers to an acquisition attempt made by one company towards another, without the consent or cooperation of the target company’s management or board of directors. Unlike friendly mergers or acquisitions, where both parties are willing participants, hostile bids often involve …

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Holdco Examples and Overview: What is a Holding Company?

What is a Holding Company? One of the main purposes of a holding company is to provide a centralized structure for managing and controlling multiple businesses. By owning the shares of subsidiary companies, the holding company can exercise control over their operations, strategic decisions, and financial management. Holding companies are …

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Godfather Offer: What It Is, How It Works, Example

Godfather Offer: What It Is A Godfather Offer is a strategic move made by a company to acquire another company in the M&A (mergers and acquisitions) category. It is a term used to describe a highly attractive and compelling offer made by the acquiring company to the target company, with …

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Flotation Cost: Formulas, Meaning and Examples

Formulas, Meaning, and Examples Flotation cost is a term used in finance to refer to the cost incurred by a company when it issues new securities. It includes expenses such as underwriting fees, legal fees, registration fees, and printing costs. Flotation costs are an important consideration for companies looking to …

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Eclectic Paradigm: Definition Example Advantages

What is Eclectic Paradigm? Ownership advantages refer to the unique resources, capabilities, or knowledge that a company possesses, which give it a competitive edge over other firms. These advantages can include brand reputation, patented technology, managerial expertise, or access to distribution networks. Location advantages refer to the benefits that a …

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