Finance

Definition: The Partial Sell-offs is the form of divestiture wherein the firm sells its business unit or a subsidiary to another because it deemed to be unfit with the company’s core business strategy. Generally, the partial sell-offs decisions are taken to fulfill one of the following business motives: The most common motive for the sell-off is to raise capital and … [Read more...] about Partial Sell-offs

Definition: The Divestiture means the sale or disposition of certain company’s assets or a business unit which is not performing well and is disposed of either through closure, sale or bankruptcy. Thus, the divestiture involves some kind of contraction and is based on the principle which says 5-3 = 3! opposite of the principle of merger & acquisition which says, 2+2 = … [Read more...] about Divestiture

Definition: A takeover is a form of an acquisition, wherein the company offers a bid for the purchase of a certain block of the equity of another company (target) to exercise complete control over its affairs. Practically, the acquirer must buy at least 51% or more paid up equity of the acquired company to enjoy full control over its operations. A Takeover can either be … [Read more...] about Anti-Takeover Defenses

Definition: The Translation Exposure or Accounting Exposure is the risk of loss suffered when stock, revenue, assets or liabilities denominated in foreign currency changes with the movement of the foreign exchange rates. In other words, the translation exposure stems from the requirement of converting the subsidiary’s assets and liabilities (operating in another country) … [Read more...] about Translation Exposure

Definition: The Operating Exposure refers to the extent to which the firm’s future cash flows gets affected due to the change in the foreign exchange rates along with the price changes. In other words, a risk that firm’s revenue will be adversely affected due to the substantial change in the exchange rate and the inflation rate is called as operating exposure. Operating … [Read more...] about Operating Exposure

Definition: The Transaction Exposure is a kind of foreign exchange risk involved in the international trade wherein the cross-currency transactions (multiple currencies) are involved. In other words, a risk faced by the company that while dealing in the international trade, the currency exchange rates may change before making the final settlement, is termed as a transaction … [Read more...] about Transaction Exposure

Definition: Foreign Exchange Exposure refers to the risk associated with the foreign exchange rates that change frequently and can have an adverse effect on the financial transactions denominated in some foreign currency rather than the domestic currency of the company. In other words, the firm’s risk that its future cash flows get affected by the change in the value of the … [Read more...] about Foreign Exchange Exposure

Definition: The Staggered Board is the board comprising of three equal classes of the board of directors who are elected on an annual basis. In other words, the staggered board is the governance practice in which certain members, generally one-third of the total board of directors are elected each year, rather than all at once. The major advantage of a staggered board over … [Read more...] about Staggered Board

Definition: The Poison Pill is the anti-takeover tactic adopted by the firm to discourage a hostile takeover, by making the stock unfavorable for the corporate raider, who has given the hostile bid. Poison Pill Strategies   Flip in: This strategy enables the existing shareholders of the target company to buy additional shares at a high discount rate. This poison … [Read more...] about Poison Pill

Definition: The White Knight is any friendly investor or a company that rescues a firm from the prospects of a hostile takeover. In other words, white knight means, any company or an individual that acquires the company standing at the extremity of being taken over by the undesired forces, often called as black knights. A white knight is a savior of the company who helps in … [Read more...] about White Knight