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 ?
A CONMAN who ran a worldwide mobile phone scam has had his pounds 365,000 fortune frozen by official asset-strippers.
FORMER Halewood saviour Tony Woodley last night called for the Government to block any possible sale of Jaguar and Land Rover to asset-strippers.
Sometimes, however, they give the impression of being little more than amoral asset-strippers after a quick buck."
The sale does have an effect on the possible sale of the club as it has served to discourage so called "asset-strippers" from buying Villa with a view simply to make profit on land development.
United's success has made it attractive for corporate raiders and asset-strippers. It is just another revenue stream.
But business organisations voiced concern, with the Federation of Small Businesses warning that the Labour leader did not understand "how jobs and apprenticeships are created in the real world" and the CBI questioning his characterisation of some firms as asset-strippers. Miles Templeman of the Institute of Directors said that any attempt by the state to choose between "good" and "bad" businesses was likely to be "simplistic and wrong".
They were recently labelled "asset-strippers" in the House of Commons by Walton MP Steve Rotheram.
BIRMINGHAM MP Liam Byrne admitted his sixmonth battle to save LDV had failed - and described the business's Chinese buyers as "asset-strippers".
FORMER Jaguar boss MP Geoffrey Robinson is hoping asset-strippers don't move in to buy the luxury car maker.
Private equity companies, which last year were responsible for one fifth of last year's pounds l,900bn-worth of mergers and acquisition, have come under the spotlight recently with unions condemning them as corporate raiders or asset-strippers, only interested in quick profits.
VILLA's pounds 7 million land sale this week was done to deter asset-strippers from taking over Doug Ellis's empire - and encourage buyers who have football as their No.1 priority.
The team who will attempt to find a buyer should not treat the exercise as a fire sale and should protect these great Welsh facilities from asset-strippers.