What is Due Diligence? Due diligence is a process of verification, investigation, or audit of a potential deal or investment opportunity to confirm all relevant facts and financial information and to verify anything else that was brought up during an M&A deal or investment process. Due diligence is completed before a deal closes to provide the buyer…
What is Change of Control? In finance, a Change of Control occurs when there is a material change in the ownership of a company. The exact criteria that determine such a change can vary and are defined by law and through contractual agreements. A change of control clause is often included in creditor pacts and…
What is Divesting? Divesting is the act of a company selling off an asset. While divesting may refer to the sale of any asset, it is most commonly used in the context of selling a non-core business unit. Divesting can be seen as the direct opposite of an acquisition. Divesting can create an injection of…
What is Predatory Lending? Predatory lending refers to the practice of offering and/or supplying a loan that is at best unfair and, at worst, abusive to the party receiving the loan. Predatory lending typically involves two key factors: The lending party creates loan terms that can’t reasonably or effectively be met. The lending party seeks…
Private Equity Transaction Timeline There are various steps involved in a Private Equity Transaction Timeline. The diagram below shows the different steps in a M&A transaction from the private equity side, along with a tentative timeline. Steps in a Private Equity Transaction Timeline 1. Teaser Sent by Bankers One of the first steps of buy-side M&A…
What is a Yellow Knight? A Yellow Knight is a company that attempts to mount a hostile takeover of another company but ends up instead discussing the idea of a merger with the target company. The change in strategy may occur when the targeted company resists the hostile takeover and the acquirer is forced to be…
Capital Raising Process – An Overview This article is intended to provide readers with a deeper understanding of how the capital raising process works and happens in the industry today. For more information on capital raising and different types of commitments made by the underwriter, please see our underwriting overview. Book Building Process During the second…
What is a Black Knight? In corporate finance, a company that is offering or executing a hostile takeover of the target company is termed a black knight. A hostile takeover is an acquisition attempt by a company or raider that the target company resists. For example, Company A is a publicly-traded company that wants to…
What is a Conglomerate Merger? A Conglomerate Merger is a union between companies that operate in different industries and are involved in distinct, unrelated business activities. Conglomerate mergers are divided into pure conglomerate mergers and mixed conglomerate mergers. The first type – the pure merger – is comprised of two companies that operate in separate…
What is a General Partnership? A General Partnership (GP) is an agreement between partners to establish and run a business together. It is one of the most common legal entities to form a business. All partners in a general partnership are responsible for the business and are subject to unlimited liability for business debts. What…
