Stock Acquisition
What is a Stock Acquisition? In a stock acquisition, a buyer acquires a target company’s stock directly from the selling shareholders. With a stock sale, the buyer is assuming ownership of both assets and liabilities – including potential liabilities from past actions of the target. The buyer is merely stepping into the shoes of the...
Asset Acquisition
What is an Asset Acquisition? An asset acquisition is the purchase of a company by buying its assets instead of its stock. In most jurisdictions, an asset acquisition typically also involves an assumption of certain liabilities. However, because the parties can bargain over which assets will be acquired and which liabilities will be assumed, the...
Poison Pill
What is a Poison Pill? A shareholder rights plan, more commonly known as a poison pill, is a company’s defense against a potentially hostile, or unsolicited, takeover attempt. The general idea of a poison pill is to dissuade any outside takeover attempt by either making the company less desirable or by typically diluting an acquirer’s...
Reverse Takeover (RTO)
What is Reverse Takeover (RTO)? A Reverse Takeover (RTO), often known as a reverse IPO, is the process in which a small private company goes public by acquiring a larger, already publicly listed company. The practice is contrary to the norm because the smaller company is taking over the larger company – thus, the merger...
Tender Offer
What is a Tender Offer? A tender offer is a proposal that an investor makes to the shareholders of a publicly traded company. The offer is to tender, or sell, their shares for a specific price at a predetermined time. In some cases, the tender offer may be made by more than one person, such...
Seller Representation Agreement
What is a Seller Representation Agreement? A seller representation agreement, also known as a listing agreement, is an agreement between a seller of real estate and a brokerage firm that provides detailed information on the property being sold. It forms the foundation of negotiations between the seller and the buyer through an agent. It is...
Reps and Warranties
What are Reps and Warranties? Reps and warranties refer to statements of fact that a seller makes as part of trying to persuade a buyer to purchase their business. Each of the parties in the transaction relies on the other to provide true information about the transaction. The seller provides assurance that the business is...
Pooling of Interests
What is Pooling of Interests? Pooling of interests refers to a technique of recording a merger or acquisition, whereby the assets and liabilities of the two companies are summed together and then netted. Historically, firms could adopt either of two approaches to accounting for consolidations or amalgamations – the purchase method and pooling of interests....
Dead Deals
What are Dead Deals? Dead deals refer to merger and acquisition deals that go through due diligence but do not close, due to various reasons related to either the seller or the buyer. When deals fail to close, various costs are incurred, both direct and indirect. These are referred to as dead deal costs. The...
Deal Team
What is a Deal Team? What is a deal team? Ownership transactions such as ESOPs, M&A, and recapitalizations are usually complex transactions that require the knowledge and skills of a wide range of professionals. A deal team needs to get all individual players contributing in the right measure and at the right time during the...
