
Types of Poison Pills - M&A in Legal English
12/24/24 • 3 min
Poison pills dilute the acquiring company's ownership stake, making the takeover more expensive and challenging.
Two main types are detailed: flip-in pills, which allow existing shareholders to buy discounted shares, and flip-over pills, granting post-merger discounted share purchases. These tactics significantly hinder hostile takeover attempts.
The overall goal is to deter unwanted acquisitions by increasing their cost and complexity.
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Poison pills dilute the acquiring company's ownership stake, making the takeover more expensive and challenging.
Two main types are detailed: flip-in pills, which allow existing shareholders to buy discounted shares, and flip-over pills, granting post-merger discounted share purchases. These tactics significantly hinder hostile takeover attempts.
The overall goal is to deter unwanted acquisitions by increasing their cost and complexity.
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Earn-out Agreements in M&A
Vocab List (M&A Focused)
- To come knocking: For an acquisition target to become available or express interest in being acquired.
- Example: "When a company with valuable intellectual property comes knocking, you have to consider an acquisition."
- Hit a target: To achieve a specific M&A objective (e.g., synergy targets, valuation goals).
- Example: "The acquisition hit the target for cost savings, exceeding initial projections."
- The whole shabang: Acquiring the entire company, including all assets and liabilities.
- Example: "Instead of just buying a division, they decided to go for the whole shabang and acquire the entire company."
- To get up front: To be transparent and direct in M&A negotiations.
- Example: "We need to get up front with the target company about our intentions and valuation."
- To boom: For the M&A market to experience a surge in activity.
- Example: "M&A activity is booming this year with record deal values."
- Paint a picture: To present a compelling vision of the post-merger integration and potential synergies.
- Example: "The CEO painted a picture of a combined company with significant market share and growth potential."
- Scoop up: To quickly acquire a target company, often before competitors can make an offer.
- Example: "The private equity firm scooped up the promising startup in a competitive bidding process."
- Hit a mark: To achieve a desired valuation or price for an M&A transaction.
- Example: "The acquisition hit the mark in terms of valuation, satisfying both the buyer and seller."
- Hot vs. old news: A target company that is currently attractive for acquisition versus one that has lost its appeal.
- Example: "That company was hot news last year, but now their technology is considered old news."
- Crystal clear: Having a clear and well-defined M&A strategy and objectives.
- Example: "Our M&A strategy is crystal clear: focus on acquiring companies that complement our existing product lines."
- Black and white: An M&A deal with straightforward terms and conditions; no ambiguity.
- Example: "The terms of the merger agreement were black and white, leaving no room for misinterpretation."
- Wiggle room: Flexibility in the negotiation of an M&A deal, such as price or deal structure.
- Example: "There's some wiggle room in the valuation, but we're not going to overpay."
- To tank: For an M&A deal to fail or fall apart.
- Example: "The merger talks tanked after the two companies couldn't agree on the terms."
- Out of nowhere: An unexpected acquisition bid or offer.
- Example: "The hostile takeover bid came out of nowhere, surprising the target company's management."
- Throw a wrench in it: An unexpected event or issue that disrupts an M&A deal.
- Example: "Regulatory concerns threw a wrench in the proposed merger."
- To plummet: For the value of a company to drop sharply, making it a more attractive acquisition target.
- Example: "The comp
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Next Episode

Flip-In Poison Pill Strategy
A flip-in poison pill is triggered when an acquirer reaches a predetermined ownership threshold, allowing existing shareholders (excluding the acquirer) to purchase additional shares at a discounted price.
This dilutes the acquirer's stake, making the takeover more expensive and less attractive. The explanation uses the example of Woke Inc. facing a hostile takeover by Hostile Inc. to illustrate how a flip-in poison pill functions.
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