asset-stripper

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asset-stripper

a predator firm which takes control of another firm (see TAKEOVER) with a view to selling off that firm's ASSETS, wholly or in part, for financial gain rather than continuing the firm as an ongoing business.

The classical recipe for asset-stripping arises when the realizable MARKET VALUE of the firm's assets is much greater than what it would cost the predator to buy the firm; i.e., where there is a marked discrepancy between the asset-backing per share of the target firm and the price per share required to take the firm over. This discrepancy usually results from a combination of two factors:

  1. gross under-valuation of the firm's assets in the BALANCE SHEET;
  2. mismanagement or bad luck resulting in low profits or losses, both of which serve to depress the firm's share price.

asset-stripper

a predator firm that takes control of another firm (see TAKEOVER) with a view to selling off that firm's ASSETS, wholly or in part, for financial gain rather than continuing the firm as an ongoing business.

The classical recipe for asset-stripping arises when the realizable market value of the firm's assets are much greater than what it would cost the predator to buy the firm; i.e. where there is a marked discrepancy between the asset-backing per share of the target firm and the price per share required to take the firm over. This discrepancy usually results from a combination of two factors:

  1. gross undervaluation of the firm's assets in the BALANCE SHEET;
  2. mismanagement or bad luck, resulting in low profits or losses, both of which serve to depress the firm's share price.
References in periodicals archive ?
That was a remark that gave the Comer group fresh encouragement to press ahead with their plans, but Neville was quick to allay Ellis' fears regarding asset-stripping.
Mr Neville, who lives in Dorridge, has pledged that the Comer brothers' plans for the club do not involve asset-stripping.
That was a remark that gave the Comer group fresh encouragement to press ahead with their plans, but Neville was quick to allay Ellis' fears regarding asset-stripping - the process of determining whether the value of a company is worth more purchased as a whole or divided into separate assets which are sold off.
Allegations of asset-stripping followed as they did a pounds 42.
The air has been thick with charges of asset-stripping and boardroom greed, and now there are rumours that the whole shooting match is up for sale to the highest bidder.
It is now difficult to recall the apprehension and suspicion which surrounded the 1989 takeover which saw the pride of Coventry absorbed into Detroit's global empire - many sceptics warning that the deal was nothing more than an asset-stripping stitch-up.
So is Ashley actually asset-stripping Rangers right in front of the eyes of its supporters?
SIR - I can remember when some businessmen were accused of asset-stripping, ie, buying cheaply companies that were in trouble and selling off their property etc for a quick profit.
Perhaps the property should be covered by restrictive development conditions -just in case the "clear case" is simply one of asset-stripping.
But lifelong Villa fan Neville has nevertheless assured Ellis that the consortium would not undertake an asset-stripping policy.
Nor is the latest episode with its Index catalogue stores an example of asset-stripping.
His asset-stripping of the mid-1980s as he prematurely broke up the glory team of the early 80s saw the sale of class players such as Walters, Cowans, Gibson, Rideout, McMahon, Hodge and Dorigo.