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 ?
He said: "If the choice is only asset-stripping private equity which independent studies for the union have shown drive down pay and conditions then there should be direct Government intervention."
"This is asset-stripping GPs to help pay for the overspending by health boards."
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 funding immediately came under fire from trade unions, who have been running a high-profile campaign against allegedly bad practices by private equity firms, including asset-stripping.
Perhaps the property should be covered by restrictive development conditions -just in case the "clear case" is simply one of 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.
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.
McLeish said: "We still have to go over the fine print and tweak one or two things." It is believed he fears his career could be hit if pounds 68m in-debt Rangers continue their asset-stripping.
The same group was ordered to repay pounds 2m in Government grants in 1980 after closing Rosedales in Bedwas with the loss of 300 jobs, amid mass pickets and allegations of asset-stripping.
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.
Rachel Reeves, head of the Commons Business Committee said: "GKN is important for the automotive and defence sectors of our economy and the Secretary of State needs to provide assurances that Britain's strengths in these sectors will not be undermined by a takeover or by asset-stripping."