Corporate finance

Accelerated Share Repurchase (ASR) Explained How companies execute accelerated share repurchase agreements with banks to receive shares immediately while the bank purchases them over time.

Accretion-Dilution Analysis in Mergers How acquirers calculate whether a deal increases or decreases pro forma EPS, and why the result shapes board messaging to shareholders.

Accretion/Dilution Analysis A financial projection showing whether an acquisition will immediately increase or decrease the buyer's pro-forma earnings per share in year one.

Acquisition An acquisition is a transaction in which one company buys another company's shares or assets. Acquisitions are the formal legal structure underlying most mergers and takeovers.

Acquisition Premium The percentage paid above a target's pre-announcement market price, reflecting strategic value and competitive pressure.

Activist Board Seat Negotiation: How Deals Get Done How activists and boards negotiate board seat arrangements, nominee vetting, committee roles, and standstill terms before—or instead of—a proxy fight.

Activist Campaign Success Rate: What the Evidence Shows Empirical research on how often activist investors achieve board seats, strategic changes, and exits—and which factors predict success.

Activist Investing in Small-Cap Companies How activist investing tactics and dynamics shift when targeting micro- and small-cap companies versus large-caps.

Activist Investor 13D Filing Explains when investors must file Schedule 13D, what it signals about activist intent, and how target companies respond to the disclosure.

Activist Investor Exit Strategies Understand how activist investors exit positions through stake sales, M&A, secondary offerings, and quiet exits—and why timing affects returns.

Activist Investor Proxy Cost Reimbursement When and how companies reimburse activist investors for proxy fight costs after a successful campaign, and the governance debates around this practice.

Activist Investor Typology Classification of activist strategies from cost-cutting and financial engineering to vision transformation and board representation.

Activist Settlement Negotiated cooperation agreements that end shareholder activist campaigns by trading board seats and operational commitments for a standstill.

Activist Short Selling A strategy in which an investor publishes critical research about a company while simultaneously holding a short position, profiting from the resulting stock decline.

Add-On Acquisition A smaller company acquired by a private equity-backed platform company to expand scale, market share, or capabilities before the sponsor's exit.

Advance Notice Bylaw Corporate bylaw requiring shareholders to notify the company well ahead of the annual meeting to nominate directors or submit proposals.

Advance Notice Bylaws and Hostile Takeovers How advance notice bylaws require early disclosure of director nominees and shareholder proposals, giving incumbent boards response time and constraining activist timing.

American Depository Receipts Certificates representing shares of foreign companies traded on US stock exchanges, allowing US investors to access international equities without currency conversion.

Anti-Greenmail Charter Provision Explained An anti-greenmail provision in a corporate charter prevents the board from repurchasing shares at a premium from a hostile bidder without full shareholder approval. Learn how it protects minority shareholders.

Asset Deal vs Stock Deal Tax Treatment Asset deal vs stock deal tax treatment: why buyers seek stepped-up basis and sellers favor stock deals, and how double taxation shapes M&A negotiations.

Auction Process How investment banks solicit and manage competing offers to maximise proceeds in a M&A sale.

Audit Committee A board subcommittee of independent directors responsible for overseeing financial reporting, internal controls, and the external audit.

Bear Hug Letter in Takeovers A bear hug letter is an acquirer's written demand to a target's board to engage in takeover negotiations or face a hostile bid. Used by both buyers and activist investors.

Beneficial Ownership Threshold 5% stake disclosure requirement that triggers regulatory scrutiny of large shareholders and restricts short-swing profit trading.

Blank Check Preferred Stock A class of preferred shares with undefined terms and rights, authorized but unissued, allowing boards to defend against hostile takeovers through rapid dilution.

Board Independence Standards Stock-exchange rules defining when a director meets independence criteria, free from material relationships with the company.

Board Interlocks and Antitrust Risk Board interlocks—when competing companies share a common director—can violate Section 8 of the Clayton Act, exposing both the director and company to antitrust liability.

Board of Directors The elected governing body of a corporation responsible for setting strategy, hiring executives, and protecting shareholder interests.

Board Refreshment Policy A board refreshment policy uses tenure limits, mandatory retirement ages, and skills-gap reviews to rotate director seats and prevent entrenchment.

Board Skills Matrix A board skills matrix maps director competencies against strategic needs, helping institutional investors and regulators evaluate board composition and talent gaps.

Board Tenure Limits: Pros and Cons Board tenure limits pros and cons—mandatory term limits force director turnover, appealing to institutional investors for fresh perspectives but raising concerns about lost expertise.

Break-Up Fee A contractual penalty paid by either party if a signed merger agreement is terminated or breached before closing.

Breakup Fee vs Reverse Termination Fee in M&A Difference between seller-paid breakup fees and buyer-paid reverse termination fees in mergers, and how deal lawyers size them.

Bridge Loan Financing Short-term interim debt arranged to fund an acquisition or expansion until permanent financing from the capital markets or other sources is completed.

Bumpitrage Accumulating shares after an acquisition is announced to pressure the buyer into raising the offer price, exploiting the temporary spread between announced and deal-closing price.

Business Combination Statute State laws restricting mergers between a corporation and any shareholder or affiliate that has crossed a threshold ownership percentage, imposing a multi-year moratorium.

Business Judgment Rule Legal standard presuming a director's decision is valid if made in good faith, with reasonable care, and in the company's best interests—absent obvious conflict.

Buyback Blackout Period Rules Share repurchase blackout period rules restrict when companies can repurchase stock around earnings releases and material events.

Bylaw Amendment Power: Board vs Shareholders Under US state law, the power to amend bylaws can rest with the board, shareholders, or both—depending on the state's corporate statute and the bylaws themselves.

Capital Allocation Activism Activist campaigns to improve dividend, buyback, or merger-and-acquisition strategy.

Capital Allocation Framework The priority hierarchy a management team applies to the deployment of operating cash flow across reinvestment, acquisitions, shareholder returns, and debt reduction.

Capital Expenditure Budgeting The process of planning, evaluating, and allocating funds for long-term asset purchases, plant and equipment, and infrastructure that will generate returns over multiple years.

Capital Return Program A board-level multi-year commitment to distribute a defined total amount of cash to shareholders through buybacks, dividends, or both.

Capital Structure for Cyclical Companies Explains how cyclical companies deliberately carry less debt to survive downturns without breaching covenants, and why balance-sheet strength matters more than leverage.

Carve-Out LBO: Buying a Division from a Large Company Carve-out LBO: How sponsors finance the purchase of a division from a large company, including transition services agreements and stranded-cost challenges.

Carve-Out vs Spin-Off vs Split-Off Three divestiture structures compared: carve-out, spin-off, and split-off differ in how ownership transfers, who receives proceeds, and their tax treatment.

Carve-Out vs Spinoff Understand the key differences between a carve-out IPO and a spinoff: partial parent ownership, tax treatment, and when each structure is right.

Cash Merger An acquisition settled entirely in cash, where the acquirer pays target shareholders a fixed dollar amount per share at closing.

Catastrophe Bond Activism Environmental and safety advocates targeting insurers and reinsurers through catastrophe bond shareholder campaigns

CEO-Chair Separation in Corporate Governance How splitting the CEO and board chair roles affects governance, accountability, and shareholder proposals—and what research suggests about board independence.

Change of Control A corporate transaction in which a majority of ownership or voting power shifts from one shareholder to another, often triggering executive severance agreements and stock vesting acceleration.

Change of Control Definition Contractual threshold specifying when ownership changes trigger severance, debt acceleration, or other financial consequences.

Change of Control Provision A change of control provision is a contractual clause that is triggered when a company undergoes a significant ownership or control change, typically through a merger, acquisition, or proxy fight. Such provisions affect executive compensation, debt terms, and business relationships.

Clawback A provision that allows a company to recover bonuses and equity compensation from executives if financial statements are restated or misconduct is discovered.

Closing Condition Requirement that must be satisfied for a transaction to legally close and transfer ownership.

Club Deal A large private equity acquisition in which multiple PE sponsors co-invest alongside each other in a single target company, sharing risk and returns.

Club Deal in Private Equity M&A A club deal brings together multiple PE firms to co-sponsor a single large acquisition, spreading risk and capital requirements across sponsors.

Collar Agreement in M&A How a price collar limits buyer and seller risk when acquisition consideration is paid in the acquirer's stock rather than cash.

Collar Provision in Stock-for-Stock Mergers A collar provision in a stock merger establishes a range of acceptable exchange ratios, protecting both buyer and seller from stock price swings between signing and closing and embedding walk-away rights if price moves exceed the collar bounds.

Compensation Committee A board subcommittee of independent directors that determines executive pay, equity grants, and retirement benefits.