Greenmail
An act of buying a corporation’s stock, threatening to take control, and then demanding that those shares be purchased back by the corporation at a premium.
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Golden Parachute
Form of acquisition defense that awards top management excessive compensation upon the company’s acquisition.
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Free Cash Flow
Cash flow from operations of a company that can be used to service debt or pay shareholder dividends.
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Financial Synergy
Economic benefit derived from a merger or acquisition. Financial Synergies usually take the form of cost savings or reduced capital costs.
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Financial Recapitalization
Form of transaction by which a company changes the its capital structure, usually to optimize the debt and equity mix.
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Financial Conglomerates
Form of conglomerate that provides a flow of funds to each segment of their operations, exercise control, and are the ultimate risk takers. In theory, financial conglomerates undertake strategic planning but do not participate in operating decisions and provide staff expertise and staff services to the operating entities.
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Fair Price Provision
Poison pill charter amendment that requires a supermajority vote to approve a merger with a major stockholder unless (a) the merger is approved by the board of directors, or (b) the acquirer pays some minimum fair price for all remaining shares.
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Exclusivity Agreement
Agreement that commits the target to not negotiate with other potential acquirers for a limited period of time. It is usually accompanied by a termination agreement that outlines the conditions under which either side may withdraw from the negotiations.
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ESOP Restructuring
Financial restructuring whereby a significant portion of equity is sold to the Employee Stock Ownership Program. May also be a Leveraged ESOP Restructuring where the ESOP takes on debt to acquire additional shares of the company.
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