With the M&A market still in the doldrums, it feels like a good time to get prepped on some of the more obscure M&A terminology. Think you know your bear hugs from your killer bees? Take our quiz and test your knowledge.
1. Which of the following is not a recognized term in the M&A world?
a) Grey knight
b) White squire
c) Yellow page
2. True or false: a prime takeover candidate yet to be approached is known as a ‘sleeping dog’.
3. Which takeover defense refers to a 1980s campaign against recreational drug use?
4. What is a ‘Revlon moment’?
a) The point at which a takeover becomes inevitable
b) When a deal becomes attractive to shareholders
c) A deal in which two cosmetics companies merge
5. What happens during a ‘backflip’ takeover?
6. In which novel – adapted into a film in 2000 – does the banker protagonist refer to M&A as ‘murders and executions’?
Answers
One point per correct answer
1. (c). Grey knights are bidders whose intentions are unclear: they might be friendly, they might not. White squires act like white knights, buying a stake to thwart a hostile bidder, but can’t afford to take full control.
2. False. It’s known as a ‘sleeping beauty’.
3. The ‘Nancy Reagan defense’, where a company asks its shareholders to reject a hostile bid. The defense is named after the former US first lady’s ‘Just say no’ campaign against drugs in the 1980s.
4. (a). A 1985 case involving Revlon set the precedent that when a sale becomes inevitable, the fiduciary obligation of the board is narrowed considerably.
5. The acquiring company becomes a subsidiary of the target firm.
6. American Psycho, by Brett Easton Ellis.
How did you do?
1-2: You just became an efficiency saving.
3-4: Might struggle as a stand-alone entity.
5-6: Pay yourself a success bonus!
