Acqisition of Assets

A buyout strategy in which key assets of the target company are purchased, rather than its shares. This is particularly popular in the case of bankrupt companies, who might otherwise have valuable assets which could be of use to other companies, but whose financing situation makes the company unattractive for buyers (an asset acquisition strategy may be pursued in almost any case where the potential target company has an unattractive financing structure). Further, the asset acquisition strategy might be pursued if the acquirer is interested in certain specific assets, and not all the possible target assets.

STRATEGY

Definition

Long-term action plan for achieving a goal.

ASSETS

Definition

Any item of economic value owned by an individual or corporation, especially that which could be converted to cash. Examples are cash, securities, accounts receivable, inventory, office equipment, real estate, a car, and other property. On a balance sheet, assets are equal to the sum of liabilities, common stock, preferred stock, and retained earnings. From an accounting perspective, assets are divided into the following categories: current assets (cash and other liquid items), long-term assets (real estate, plant, equipment), prepaid and deferred assets (expenditures for future costs such as insurance, rent, interest), and intangible assets.

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BUYOUT

Definition

The purchase of controlling interest in one corporation by another corporation, in order to take over assets and/or operations.

ACQUISITION

Definition

Acquiring control of a corporation, called a target, by stock purchase or exchange, either hostile or friendly. also called takeover.

CONCEPTUAL DECOMPOSITION OF THE PROBLEM

Decision-making in the domain of capital asset acquisition planning reflects the hierarchical

structures of tax and financial accounting regulations. As a result, classification problem solving

offers a natural approach for selecting an appropriate acquisition type based on a firm's current

status and goals. The Internal Revenue Service (IRS) delineates a hierarchy of transaction types in

order to determine the correct tax treatment for each acquisition [11], and the Financial Accounting

Standards Board (FASB) has created its own classifications to insure that a firm's financial reports

represent its standing as fairly as possible [1,13]. To a lesser extent, the corresponding tax

regulations and financial accounting standards impose a natural ordering on the process of selecting

one transaction type from among a set of alternative types. These hierarchies can be viewed from

two different perspectives. The IRS and the FASB use their own structures to classify completed

transactions for the purpose of insuring regulatory compliance by the parties involved. The parties

themselves potential buyers and lessees, potential sellers and lessors attempt to achieve the most

favorable tax and reporting effects by using a composite hierarchy, assembled using compiled

knowledge, to choose a transaction type having the desired characteristics.

ASSET ACQUISITION STRATEGY

Definition
Takeover scheme in which the acquiring firm buys out the target firm's assets instead of buying its shares/stock.
asset acquisition strategy is in the Accounting & Auditing, Banking, Commerce & Finance, Decision Making, Problem Solving, & Strategy and Investing subjects.