Management and Organizational Studies 2276A/B Study Guide - Due Diligence, Cherry Picking, Cash Cash

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2276A/B
• Professor: Frederick King

Document Summary

You have identified a business which is attractive to you: you have a business of which you would like to sell, as a purchaser, you do some initial investigation, then you have some decisions to make. Strategic purchases/acquisition companies in the same industry: vertical integration purchasing a supplier/distributor, horizontal integration expanding into a new market (taking over competitors) Financial purchases investments: when corporations have spare cash, they purchase other promising companies that will return on their investment, help corporations to diversify into different industries. Share purchase the purchasing company buys the shares of another: transaction between purchaser and shareholders. Asset purchase the purchasing company buys the assets of another: transaction between the two companies, capital assets that have been depreciated below their fair market value can save the purchaser large amounts in taxes. May be binding in only some specific areas (confidentiality, lock-up, etc. ) Usually commence after letter of intent is signed. Against corporation (and vendor if share purchase)