Marketing Research BasicsLEVERAGED BUYOUT – LBOLBO is acquisition of a company using large amounts of debt (bonds or loans). Since the D/E ratio is high, these bonds are called junk bonds. To secure debt often assets of both companies are used as collateral. Allows large acquisitions without committing large amounts of capitalHOSTILE TAKEOVER: if the LBO uses the assets of the the company being acquired to secure the debt required. It’s risky because, if the combined cash flows of acquirer and acquired don’t meet debt obligations, the acquired will go into lossLEVERAGED RECAPITALISATIONThe company in order to avoid take-over takes up a large amount of debt to make itself unattractive. It recapitalizes its assets and liabilities such that it increases its debt amount to pay dividends and/ or it repurchases its shares. This is called shark repellant because it takes up large debt amounts White knight is a savior company that is sought when a hostile takeover is in the offing. The white night usually lets the management continues, gives time for negotiation or gives a better deal to the investor
Pacman defense: in case of hostile takeover, the target company tries to get the stock of the attacking company to counter the bid.Tender Offer: An offer to purchase shares at a premium above the market pricePoison pill: strategies to prevent hostile takeovers.ESOP that kicks in if acquired ( makes it difficult to retain good employees)Golden parachute: benefits to management if the firm is acquiredIssueing preferred stocks that are convertible to common stock if acquiredComplicated byelaws that delay board of directors election etc to create difficulties to acquiring firmsIssueing more stocks to existing shareholders at a discountPoison put: the right of a bond holder to redeem before maturity in case of a hostile takeover
Pacman defense: in case of hostile takeover, the target company tries to get the stock of the attacking company to counter the bid.Tender Offer: An offer to buy shares at a premium above the market pricePoison pill: strategies to prevent hostile takeovers.ESOP that kicks in if acquired ( makes it difficult to retain good employees)Golden parachute: benefits to management if the firm is acquiredIssueing preferred stocks that are convertible to common stock if acquiredComplicated byelaws that delay board of officers election etc to create difficulties to acquiring firmsIssueing more stocks to existing shareholders at a discountPoison put: the right of a bond holder to redeem before maturity in case of a hostile takeover
Pacman defense: in case of hostile takeover, the target company tries to get the stock of the attacking company to counter the bid.Tender Offer: An offer to buy shares at a premium above the market pricePoison pill: strategies to prevent hostile takeovers.ESOP that kicks in if acquired ( makes it difficult to retain good employees)Golden parachute: benefits to management if the firm is acquiredIssueing preferred stocks that are convertible to common stock if acquiredComplicated byelaws that delay board of directors election etc to create difficulties to acquiring firms>
Pacman Defense: in case of hostile takeover, the target company tries to get the stock of the attacking company to counter the bid.Tender Offer: An offer to buy shares at a premium above the market pricePoison pill: strategies to prevent hostile takeovers.ESOP that kicks in if acquired ( makes it difficult to retain good employees)Gold/silver bullion coin: security in case of hostile takeover.ESOP that kicks in if acquired ( makes it difficult to retain good employees)Packeted gold: security in case of hostile takeover.ESOP that kicks in if acquired ( makes it difficult to retain good employees)Struck gold coin: security in case of hostile takeover.ESOP that kicks in if acquired ( makes it difficult to retain good employees)Lucky coins: security in case of hostile takeover.ESOP that kicks in if acquired ( makes it difficult to retain good employees)Saving silver coins: security in case of hostile takeover.ESOP that kicks in if acquired ( makes it difficult to retain good employees)Capped diamonds: security in case of hostile takeover.ESOP that kicks in if acquired ( makes it difficult to retain good employees)Copper/pink coins: security in case of hostile takeover.ESOP that kicking in if acquired ( makes it difficult to retain good employees)Saving coins: security in case of hostile takeover.ESOP that kicks in when they buy/sell.>http://www.bldg.ca/newsletters/article19.asp?page=P&sources=&articleId=9&articleId=36&page=12&