A captive insurance company is a subsidiary company formed to insure the risks of its parent company or a group of companies. This structure allows the parent company to manage and tailor its own risk management strategy, potentially leading to cost savings and more comprehensive coverage.
A contingency fund is an amount reserved for a possible loss, such as those caused by a business setback. Contingency funds and other reserves set aside are not deductible for tax purposes.
A corporate acquisition involves one company purchasing most or all of another company's shares to gain control of that company, which can lead to significant structural and operational changes.
Corporate strategic planning is a management process involving the determination of the basic long-term objectives of an organization and the adoption of specific action plans to attain these objectives. It encompasses the analysis of the environment, establishing objectives, performing situational analyses, selecting alternative strategies, and implementing and monitoring the strategic plans.
A Crown Jewel Option is a defensive strategy used by companies to prevent hostile takeovers by giving a partner or friendly company the right to buy some of its best assets at a favorable price if a takeover were successful.
In corporate mergers and acquisitions, the term 'crown jewels' refers to the target company's most desirable and valuable properties. The disposal or sale of these assets can significantly reduce the company's overall value and attractiveness as a candidate for takeover.
A business strategy where a large company or group splits up into multiple independent companies, or sells off subsidiaries.
A friendly takeover occurs when the management and board of directors of the target company are in agreement with the acquisition and recommend that shareholders approve the offer.
Financial incentives offered to key staff to persuade them to remain with an organization.
A hostile bid is an attempt to acquire a company without the approval of the company's board of directors. Unlike an agreed bid, a hostile bid is unsolicited and can be seen as unfriendly by the target company.
An interlocking directorate refers to the practice where individuals serve on the boards of multiple companies. While legal for non-competing firms, it is restricted by the Clayton Anti-Trust Act of 1914 for competing companies.
A killer bee is an investment banker who devises strategies to assist businesses in resisting predatory takeover bids by making the target company appear less attractive.
Long-range planning involves strategizing for periods exceeding five years, taking into account the future impacts of present, short-range, and intermediate-range events. It is a crucial aspect of strategic management and organizational development.
MD&A (Management Discussion and Analysis) provides a narrative explanation of a company's financial statements, offering insights into the company's performance, financial condition, and future outlook in a comprehensive manner.
Milking refers to the act of taking full advantage of a situation for personal or corporate gain, often to the detriment of another party.
A Multinational Enterprise (MNE) is a company that has facilities and other assets in at least one country other than its home country. This typically includes offices or factories, as well as a centralized head office where they coordinate global management.
A non-divisive reorganization is a corporate restructuring process that involves changes to the structure, operations, or ownership of a company without a divisive impact, typically executed to enhance organizational efficiency and shareholder value.
A raider is an individual or organization that seeks to take over a company, often through aggressive strategies and hostile takeover bids, to capitalize on undervalued assets.
Restructuring involves reorganizing the composition and operations of an organization, which can result in significant changes, including the elimination or replacement of departments and divisions, and potentially causing temporary or permanent layoffs.
Shareholder Value Analysis (SVA) is a financial management method that focuses on increasing the value delivered to shareholders through strategic decision-making and performance evaluation.
Shark repellent is a measure undertaken by a corporation to discourage unwanted takeover attempts by making the company less attractive to the potential acquirer.
Strategic Financial Management is an approach that integrates financial techniques with strategic decision-making to optimize long-term business performance.
Synergy describes the added value created by merging two separate firms, leading to a greater return than the sum of their individual contributions. This enhanced return is typically anticipated during merger or takeover activities.
A company that is the subject of a takeover bid by another company. Understanding the dynamics and implications of being a target company is crucial for shareholders, managers, and potential acquirers.
Virtual cooperation refers to a group of companies that form a temporary alliance using a computer network to accomplish a shared objective. This strategic collaboration allows businesses to leverage each other's strengths and resources without the need for physical proximity.
