The Strategy Blog, Edited by Will Dearman » Glossary

White Squire

Will Dearman — Fri, 07 Aug 2009 03:35:22 +0000

A significant stockholder sympathetic to management that would make the transaction more difficult for the undesired acquirer

White Knight

Will Dearman — Fri, 07 Aug 2009 03:34:55 +0000

Potential acquirer that would ‘rescue’ the firm from an undesired acquisition.

Weighted Average Cost of Capital

Will Dearman — Fri, 07 Aug 2009 03:34:34 +0000

Cost of a firm’s capital weighted by utilization; includes both a debt and equity allocation.

Vertical Merger

Will Dearman — Fri, 07 Aug 2009 03:34:09 +0000

Entails combining firms along the value chain.

Tracking Stock

Will Dearman — Fri, 07 Aug 2009 03:33:51 +0000

Transaction by which a parent company sells an interest in the cash flows from one of its subsidiaries.

Term Sheet

Will Dearman — Fri, 07 Aug 2009 03:33:31 +0000

Document that briefly outlines the proposed terms of the transaction.

Synergy

Will Dearman — Fri, 07 Aug 2009 03:33:13 +0000

Gain from the combination of two businesses that is greater than the sum of either of the two businesses independently.

Supermajority Provision

Will Dearman — Fri, 07 Aug 2009 03:32:52 +0000

Form of acquisition defense that raises the minimum number of votes required for approval of a merger (e.g., to two-thirds or three-quarters of outstanding shares), implying that a hostile acquirer needs more than 50 percent of the votes to effect a change in control.

Standstill Agreement

Will Dearman — Fri, 07 Aug 2009 03:32:24 +0000

Agreement by which the acquirer agrees not to purchase shares of the target for a specified period of time.

Split Off

Will Dearman — Fri, 07 Aug 2009 03:32:03 +0000

Portion of parent company shares are exchanged for shares of the subsidiary.