Glossary · 89 terms
Corporate Actions
All corporate actions terms in the EquitiesAmerica.com glossary — plain-English definitions for American investors.
Accelerated Share Repurchase(ASR)
An accelerated share repurchase (ASR) is a transaction in which a public company contracts with an investment bank to buy back a large block of its own shares immediately, with the bank subsequently purchasing the equivalent shares in the open market over time to close out its position.
Accretion (M&A)(EPS accretion)
In mergers and acquisitions, accretion describes the increase in an acquirer's earnings per share that results from completing a transaction, meaning the combined company's pro forma EPS is higher than the acquirer's standalone EPS — a condition generally viewed as favorable by equity analysts and a key criterion boards use when evaluating deal financial terms.
Acquisition(takeover)
An acquisition is a corporate transaction in which one company — the acquirer — purchases a controlling stake in or the entire ownership of another company — the target — either through purchasing its shares, assets, or through a merger agreement.
Activist Investor(corporate raider)
An Activist Investor is a hedge fund, institutional investor, or individual who acquires a meaningful stake in a public company and then presses management or the board for changes they believe will increase shareholder value.
Annual Report (10-K)(10-K)
The Annual Report on Form 10-K is the comprehensive annual filing that U.S. public companies must submit to the SEC, providing a detailed account of the company's financial performance, business operations, risk factors, and management's analysis for the fiscal year.
Anti-Dilution Protection(anti-dilution ratchet)
Anti-dilution protection is a contractual right granted to preferred shareholders — typically venture capital investors — that adjusts the conversion price of their preferred stock downward if the company subsequently issues shares at a lower price, preserving the economic value of their investment against down-round dilution.
Antitrust Review (Hart-Scott-Rodino)(HSR filing)
Antitrust review under the Hart-Scott-Rodino Antitrust Improvements Act requires parties to large US mergers and acquisitions to file pre-merger notifications with the Federal Trade Commission and Department of Justice and observe a waiting period before closing, allowing regulators to evaluate whether the combination would substantially reduce competition.
Appraisal Rights(dissenters' rights)
Appraisal rights are a statutory right available to shareholders who dissent from certain mergers, allowing them to demand a judicial determination of the 'fair value' of their shares rather than accepting the consideration offered in the merger.
Bidding War(auction process)
A bidding war is a competitive M&A situation in which two or more prospective acquirers make successive, escalating offers for the same target company, ultimately driving the acquisition price significantly above the initial bid.
Bolt-On Acquisition(add-on acquisition)
A bolt-on acquisition is the purchase of a smaller company by a larger platform company — often a private equity-backed business — to expand the platform's scale, geographic reach, product offerings, or customer base without building those capabilities organically.
Break-Up Fee(termination fee)
A break-up fee (also called a termination fee) is a contractual payment owed by a party that walks away from a signed M&A agreement under specified circumstances, designed to compensate the non-breaching party for its transaction costs and the opportunity cost of having committed to the deal.
Cap Table(capitalization table)
A capitalization table (cap table) is a spreadsheet or register that shows the complete ownership structure of a company, including every class of equity security outstanding, who holds it, at what price it was issued, and what percentage of the fully diluted company each holder owns.
Carve-Out(equity carve-out)
A carve-out is a corporate transaction in which a parent company separates and sells a portion of its business — typically a subsidiary or division — either through a partial IPO, a sale to a third party, or a spin-off to existing shareholders.
Cash Dividend(dividend)
A cash dividend is a direct payment of money from a company's earnings to its shareholders, typically distributed quarterly, as a way to return capital to investors and signal financial health.
CFIUS Review(CFIUS)
CFIUS review refers to the national security assessment conducted by the Committee on Foreign Investment in the United States, a multi-agency federal body that reviews foreign acquisitions of US businesses to identify and mitigate risks to national security.
Change of Control Provision(CoC provision)
A change of control provision is a contractual clause that triggers specific rights, obligations, or consequences — such as loan acceleration, contract termination, or equity vesting — upon the acquisition of a controlling interest in a company.
Chapter 11 Bankruptcy(Chapter 11)
Chapter 11 bankruptcy is a form of US federal bankruptcy protection that allows a financially distressed company to continue operating while it reorganizes its debts and business operations under court supervision, with the goal of emerging as a viable going concern.
Club Deal(consortium buyout)
A club deal is a leveraged buyout in which two or more private equity firms join together as co-sponsors to acquire a target company, sharing the equity investment, governance responsibilities, and eventual proceeds from a future exit.
Consent Decree(consent order)
A consent decree is a court-approved agreement between a merging party and a government agency — typically the FTC or DOJ — under which the party agrees to specific remedies, such as divestitures or behavioral restrictions, in order to resolve antitrust concerns and obtain clearance to proceed with a transaction.
Cross-Border Merger(international merger)
A Cross-Border Merger is a business combination involving companies incorporated or domiciled in different countries, requiring compliance with the corporate, securities, tax, antitrust, and foreign investment laws of multiple jurisdictions simultaneously, and typically resulting in a combined entity domiciled in one of the parties' home countries or a third jurisdiction.
Debtor-in-Possession Financing(DIP financing)
Debtor-in-possession (DIP) financing is a specialized form of lending extended to a company that has filed for Chapter 11 bankruptcy protection, providing liquidity to fund operations during the reorganization process in exchange for super-priority status over pre-petition creditors.
Delisting(exchange delisting)
Delisting is the removal of a company's securities from a national securities exchange — such as the NYSE or NASDAQ — either voluntarily, at the company's request, or involuntarily, when the company fails to maintain the exchange's listing standards related to share price, market capitalization, shareholder equity, or financial reporting compliance.
Dilution (M&A)(EPS dilution)
In mergers and acquisitions, dilution describes the decrease in an acquirer's earnings per share that results from completing a transaction, meaning the combined company's pro forma EPS is lower than the acquirer's standalone EPS — a condition that often prompts analyst skepticism and requires management to articulate a credible path to future accretion through synergy realization or earnings growth.
Divestiture(asset disposal)
A divestiture is the sale, spin-off, or other disposal of a business unit, subsidiary, product line, or asset by a company, either to raise capital, streamline operations, satisfy regulatory requirements, or focus on core competencies.
Down Round
A down round is a venture capital or private equity financing in which a company raises capital at a lower pre-money valuation than its most recent prior round, indicating that the company's implied value has declined since the previous fundraise.
Drag-Along Rights
Drag-along rights are contractual provisions in shareholder agreements that allow a majority shareholder (or defined group of shareholders) to compel minority shareholders to sell their shares on the same terms in a company sale, ensuring the majority can deliver 100% of the company to a buyer without minority holdouts blocking the transaction.
Dutch Auction(Dutch auction tender offer)
A Dutch auction is a price-discovery mechanism in which the final purchase price is set at the lowest price at which the entire offering can be sold, meaning all winning bidders pay the same clearing price regardless of their individual bid levels. In U.S. corporate finance, Dutch auctions are used for share repurchase tender offers and certain IPO pricing processes.
Dutch Auction Tender(Dutch auction repurchase)
A Dutch Auction Tender is a share repurchase or primary offering mechanism in which the issuer specifies a price range, invites shareholders or investors to submit the quantity of shares they are willing to sell (or purchase) and the minimum (or maximum) price acceptable, and then determines the single uniform clearing price at which the desired quantity can be transacted.
Earnout
An earnout is a contingent payment mechanism in M&A transactions whereby the seller receives additional consideration after closing if the acquired business achieves specified financial or operational milestones over a defined post-closing period.
Escrow
In M&A, escrow refers to a portion of the purchase price held by a neutral third-party agent after closing for a specified period to secure the seller's indemnification obligations, ensuring funds are available to compensate the buyer for breaches of representations and warranties or other post-closing claims.
Ex-Rights Date(ex-rights)
The ex-rights date is the first trading day on which a stock trades without the right to participate in a company's current rights offering, meaning investors who purchase shares on or after this date do not receive the subscription rights being distributed to existing shareholders as part of the capital-raising transaction.
Exchange Offer(stock-for-stock tender offer)
An Exchange Offer is a transaction in which one company offers its own securities — typically shares of common stock — to the shareholders of another company in exchange for their shares, effectively using stock as the consideration for an acquisition or reorganization rather than cash.
Fairness Opinion(banker fairness opinion)
A fairness opinion is a written assessment by an independent financial advisor — typically an investment bank — stating whether the consideration to be paid in a merger, acquisition, or other significant transaction is fair from a financial point of view to the shareholders receiving it.
Forced Conversion(mandatory conversion)
A forced conversion is a corporate action in which the issuer of a convertible security — such as a convertible bond or convertible preferred stock — exercises its right to compel holders to convert their securities into common shares before the scheduled maturity or redemption date, typically when the common stock price has risen sufficiently above the conversion price.
Friendly Merger(negotiated merger)
A friendly merger is a negotiated combination of two companies in which both boards of directors agree to terms, recommend the transaction to their respective shareholders, and cooperate throughout the due diligence and closing process.
Go-Shop Provision(post-signing market check)
A go-shop provision is a clause in a merger agreement that permits the target company's board to actively solicit competing acquisition proposals from third parties for a defined period after signing, typically 30 to 45 days, before the no-shop restriction takes effect.
Going Private(take-private)
Going private is the process by which a publicly traded company converts to a privately held entity, typically through a leveraged buyout, a management buyout, or a merger with a private equity-backed acquirer, resulting in the delisting of its shares and the termination of its SEC reporting obligations.
Going-Dark Transaction(SEC deregistration)
A Going-Dark Transaction refers to the process by which a publicly traded company deregisters its securities under the Securities Exchange Act of 1934, suspending or terminating its ongoing SEC reporting obligations, typically by reducing the number of record holders below the statutory thresholds that require continued Exchange Act registration.
Golden Parachute(change-of-control severance)
A golden parachute is a contractual provision guaranteeing senior executives of a public company substantial compensation — typically including severance pay, accelerated vesting of equity awards, and continuation of benefits — upon termination of employment following a change of control.
Greenmail(targeted repurchase)
Greenmail is a takeover defense tactic in which a target company buys back a large block of its own shares from a hostile activist or acquirer at a premium above the market price, in exchange for the investor's agreement to stop pursuing the acquisition or cease other hostile activities, effectively paying off the would-be acquirer at other shareholders' expense.
Hostile Takeover(unsolicited takeover)
A hostile takeover is an acquisition attempt in which the acquiring company pursues control of a target without the consent or cooperation of the target's board of directors, typically by going directly to shareholders through a tender offer or proxy fight.
Indemnification (M&A)
Indemnification in M&A is the contractual obligation of one party — typically the seller — to compensate the buyer for losses, damages, or liabilities arising from breaches of representations and warranties, covenant violations, or specific identified risks that were known at closing.
Leveraged Buyout(LBO)
A leveraged buyout (LBO) is an acquisition in which the buyer finances the majority of the purchase price with debt, using the acquired company's assets and cash flows as collateral, with the goal of generating returns through debt paydown, operational improvement, and eventual resale.
Leveraged Recapitalization(levered recap)
A leveraged recapitalization is a corporate restructuring in which a company takes on substantial new debt to fund a large special dividend or a massive share repurchase, significantly increasing its leverage ratio and financial risk while returning capital to shareholders, often as a defensive measure against hostile takeovers.
Liquidation Preference
A liquidation preference is a provision in preferred stock agreements that entitles the holder to receive a specified amount — typically 1x the invested capital — before common shareholders receive any proceeds in a liquidation, sale, or winding down of the company.
Management Buyout(MBO)
A management buyout (MBO) is a transaction in which a company's existing management team acquires a controlling interest in the business, typically with the backing of private equity investors and significant debt financing, taking the company private or spinning off a division.
Material Adverse Change (MAC Clause)(MAC clause)
A Material Adverse Change (MAC) clause is a contractual provision in merger and acquisition agreements that allows the acquiring party to walk away from a deal — or renegotiate its terms — if the target company suffers a significant deterioration in its business, financial condition, or prospects before the transaction closes.
Merger(combination)
A merger is a corporate transaction in which two companies combine to form a single new entity, typically through an exchange of shares or cash, creating a combined organization intended to be more valuable than the sum of its parts.
Modified Dutch Auction(modified Dutch auction tender)
A Modified Dutch Auction is a variation of the Dutch Auction tender offer in which the company specifies a narrower price range than a standard Dutch Auction and may apply additional parameters — such as a minimum tender condition or a cap on the premium paid — that give the company more control over the final clearing price and total consideration paid.
Morris Trust Transaction(reverse Morris Trust)
A Morris Trust transaction is a tax planning structure in which a corporation spins off a subsidiary to its shareholders on a tax-free basis and then merges that subsidiary with a third-party acquirer, effectively allowing the sale of a business unit without triggering a taxable gain at the corporate level.
No-Shop Provision(no-solicitation provision)
A no-shop provision is a clause in a merger agreement that prohibits the target company from soliciting, initiating, or encouraging alternative acquisition proposals from third parties after signing, protecting the buyer's investment of time and capital during the period between signing and closing.
Non-Compete Agreement(NCA)
A non-compete agreement in M&A restricts the seller or key employees of an acquired business from starting or joining a competing enterprise within a defined geographic area and time period after the transaction closes, protecting the buyer's investment in the acquired business.
Odd Lot Tender(odd lot offer)
An odd lot tender offer is a corporate action in which a company invites shareholders who own fewer than 100 shares (an odd lot) to tender their shares to the company, typically at market price or a small premium, allowing the company to reduce its shareholder count and lower administrative costs while providing small holders with a fee-free exit.
Odd-Lot Tender Offer(odd-lot buyback)
An Odd-Lot Tender Offer is a corporate repurchase mechanism targeting shareholders who hold fewer than 100 shares (an odd lot), allowing them to sell their entire odd-lot position at a specified price, typically without proration, in order to eliminate costly small-account maintenance while providing a convenient exit for small shareholders.
Platform Company(platform investment)
A platform company is the initial, usually larger acquisition made by a private equity fund in a particular industry or segment, which then serves as the foundation for a series of bolt-on acquisitions intended to build scale and increase enterprise value.
Poison Pill(shareholder rights plan)
A poison pill, formally called a shareholder rights plan, is a corporate defense mechanism that allows a company's board to issue new shares at a steep discount to existing shareholders (other than the hostile acquirer) when any single investor acquires more than a defined threshold of shares, diluting the acquirer's ownership and making an unsolicited takeover prohibitively expensive.
Poison Pill Defense(shareholder rights plan)
A Poison Pill Defense is a shareholder rights plan adopted by a company's board that allows existing shareholders to purchase additional shares at a steep discount if a hostile acquirer accumulates stock beyond a set ownership threshold, diluting the acquirer's stake and making a takeover prohibitively expensive.
Proxy Statement(DEF 14A)
A proxy statement is an official document filed with the SEC and distributed to shareholders that provides the information needed to vote on matters at a company's annual or special meeting, including director elections, executive compensation, and major corporate proposals.
Quarterly Report (10-Q)(10-Q)
The Quarterly Report on Form 10-Q is a condensed financial report that U.S. public companies file with the SEC within 40–45 days of each of the first three fiscal quarters, providing updated financial statements and management's discussion of recent developments.
Ratchet (Venture Capital)
A ratchet in venture capital is a provision that automatically adjusts the ownership percentage or conversion price of an investor's preferred shares based on performance outcomes — either a valuation ratchet (tied to company performance at a future date) or a price ratchet (tied to the price of a subsequent financing round).
Redomiciliation(corporate redomicile)
Redomiciliation is the process by which a company changes its legal domicile — the jurisdiction of incorporation — from one country or state to another, without necessarily altering the location of its operational headquarters, management, or employees, typically for tax efficiency, regulatory, or capital market access reasons.
Regulatory Approval (M&A)(merger clearance)
Regulatory approval in M&A refers to the process of obtaining clearance from government agencies — including antitrust regulators, sector-specific regulators, and national security bodies — that is required before a merger or acquisition can legally close.
Representations and Warranties(reps and warranties)
Representations and warranties in M&A agreements are factual statements made by the seller (and sometimes the buyer) about the condition of the business at signing and closing, which, if inaccurate, give the other party the right to seek indemnification or, in serious cases, terminate the deal.
Reverse Merger(reverse takeover)
A reverse merger is a transaction in which a private company acquires a controlling stake in a publicly traded shell company, allowing the private company to become publicly listed without completing a traditional initial public offering.
Reverse Stock Split(reverse split)
A reverse stock split is a corporate action that reduces the number of a company's outstanding shares by combining multiple shares into fewer shares at a proportionally higher price, leaving total market capitalization unchanged.
Rights Issue(rights offering)
A Rights Issue is a corporate capital-raising transaction in which a company offers existing shareholders the right to purchase additional new shares at a discount to the prevailing market price, in proportion to their current holdings, before offering any unsold shares to other investors.
Rights Offering(rights issue)
A rights offering is a corporate action that gives existing shareholders the right — but not the obligation — to purchase additional shares of the company at a discounted price, typically in proportion to their existing holdings, before the offer is extended to outside investors.
Sale-Leaseback(sale and leaseback)
A Sale-Leaseback is a financial transaction in which a company sells an asset it owns and simultaneously enters into a lease agreement with the buyer to continue using the asset, converting owned property into operating lease obligations while generating immediate cash proceeds from the sale.
Scrip Dividend(stock dividend alternative)
A scrip dividend is a corporate action in which a company offers shareholders the option to receive additional shares in lieu of a cash dividend, allowing the company to preserve cash while still distributing value to shareholders, with the new shares issued at a price typically set at a small discount to the current market price.
Securitization(asset securitization)
Securitization is a structured finance process in which an originator pools illiquid financial assets — such as mortgages, auto loans, credit card receivables, or corporate loans — transfers them to a Special Purpose Vehicle, and issues securities backed by the cash flows from the pooled assets to capital market investors.
Self-Tender Offer(issuer tender offer)
A Self-Tender Offer is a formal offer by a company to purchase a specified number of its own outstanding shares from existing shareholders at a stated price or within a stated price range, conducted under the SEC's tender offer rules and subject to disclosure, timing, and proration requirements distinct from open-market repurchase programs.
Shareholder Activism(activist campaign)
Shareholder Activism is the use of equity ownership stakes to influence a public company's strategy, governance, capital allocation, or management through direct engagement, public campaigns, or contested board elections.
Special Dividend
A special dividend is a one-time, non-recurring cash payment made to shareholders by a company, typically funded by exceptional earnings, asset sales, or accumulated cash surpluses, and distinct from the company's regular dividend program.
Special Purpose Vehicle(SPV)
A Special Purpose Vehicle (SPV), also called a Special Purpose Entity (SPE), is a legally distinct subsidiary entity created by a parent company to isolate specific assets, liabilities, or risks, serving as the foundational structure for securitizations, project financings, joint ventures, and various off-balance-sheet arrangements.
Spin-Off(spinout)
A spin-off is a corporate transaction in which a parent company separates a subsidiary or business unit into an independent publicly traded company by distributing shares of the new entity to existing shareholders on a pro-rata basis.
Squeeze-Out Merger(freeze-out merger)
A squeeze-out merger, also called a freeze-out merger, is a transaction in which a majority shareholder with sufficient ownership uses a statutory merger to acquire the remaining minority shares, forcing minority shareholders to accept cash or other consideration for their equity.
Standstill Agreement
A standstill agreement is a contractual restriction that prohibits a party — typically an activist investor, strategic buyer, or potential acquirer — from acquiring additional shares, making a tender offer, or taking other escalatory actions toward a target company for a specified period.
Stock Buyback(share repurchase)
A stock buyback — also called a share repurchase — occurs when a company uses its own cash to purchase its outstanding shares from the open market or directly from shareholders, reducing the total share count and typically increasing earnings per share.
Stock Dividend
A stock dividend is a dividend paid to shareholders in the form of additional shares of the company rather than cash, proportionally increasing the number of shares outstanding while leaving each shareholder's ownership percentage unchanged.
Synergy (M&A)(deal synergies)
In mergers and acquisitions, synergy refers to the incremental economic value created when two companies combine that neither could generate independently, typically arising from cost reductions, revenue enhancements, or financial improvements that justify paying an acquisition premium above the target's standalone intrinsic value.
Tag-Along Rights(co-sale rights)
Tag-along rights (also called co-sale rights) are contractual provisions that protect minority shareholders by entitling them to participate in the sale of shares by a majority or controlling shareholder on the same terms and conditions, preventing the minority from being left behind after a change in control.
Tax Inversion(corporate inversion)
A Tax Inversion is a corporate restructuring strategy in which a U.S. company reincorporates in a foreign country with a lower corporate tax rate by merging with a foreign company, causing the combined entity's legal parent to be domiciled abroad while business operations remain substantially U.S.-based.
Tender Offer(takeover bid)
A tender offer is a public bid by an acquirer directly to a company's shareholders to purchase some or all of their shares at a specified price — usually at a premium to the current market price — within a defined time period.
Tender Offer Premium(acquisition premium)
A tender offer premium is the percentage by which an acquirer's offer price per share exceeds the target company's unaffected stock price — typically the closing price one month or one trading day before the deal announcement — and represents the financial incentive offered to target shareholders to tender their shares and accept the transaction.
Topping Bid(competing bid)
A topping bid is an acquisition proposal made by a competing buyer that exceeds the price or terms of a previously announced merger agreement, triggering the target board's obligation to evaluate whether the new offer constitutes a superior proposal.
Tracking Stock(letter stock)
A tracking stock is a class of equity security issued by a parent company whose financial performance and dividend rights are tied to the performance of a specific subsidiary or business unit, rather than the parent company as a whole.
Up Round
An up round is a venture capital financing in which a company raises capital at a higher pre-money valuation than its previous funding round, indicating that the company has grown in value and that investors are willing to pay more per share than prior investors paid.
Warrant (Securities)(equity warrant)
A Securities Warrant is a derivative instrument issued by a company that grants the holder the right, but not the obligation, to purchase a specified number of the company's shares at a predetermined exercise price before an expiration date, typically issued alongside bonds or in SPAC structures as an equity sweetener.
White Knight(friendly acquirer)
A white knight is a friendly acquirer invited by the board of a company facing a hostile takeover to submit a competing bid, offering the target's shareholders and management a preferred alternative to the hostile transaction and potentially blocking the unwanted acquirer from completing its offer.