Asset Stripper

AAA

DEFINITION of 'Asset Stripper'

An individual or company, which purchases a corporation with the intention of dividing that corporation up into its parts and selling these parts for profit. An asset stripper will determine if the value of a company is worth more as a whole or as separate assets. Usually the asset stripper sells some assets off immediately then sells the functioning portion of the business later.

INVESTOPEDIA EXPLAINS 'Asset Stripper'

This is a corporate purchaser who discovers companies, which will create more profit by liquidating the parts rather than through business operations. For example an asset stripper could purchase a battery company for $100 million, strip and sell the R&D division for $30 million, then sell the remaining company for $85 million, for a profit of $15 million. The asset stripper could also just sell a portion of the business to fulfill debt obtained from acquiring the company.

RELATED TERMS
  1. Asset Rationalization

    Reorganizing a firm's assets in order to improve operating efficiencies ...
  2. Asset Stripping

    The process of buying an undervalued company with the intent ...
  3. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  4. Chapter 7

    A bankruptcy proceeding in which a company stops all operations ...
  5. Asset

    1. A resource with economic value that an individual, corporation ...
  6. Raider

    An individual or organization that tries to take over a company ...
RELATED FAQS
  1. How do I calculate a modified duration using Matlab?

    The modified duration gauges the sensitivity of the fixed income securities to changes in interest rates. To calculate the ... Read Full Answer >>
  2. How do I calculate the rule of 72 using Matlab?

    In finance, the rule of 72 is a useful shortcut to assess how long it takes an investment to double given its annual growth ... Read Full Answer >>
  3. How do I calculate the standard error using Matlab?

    In statistics, the standard error is the standard deviation of the sampling statistical measure, usually the sample mean. ... Read Full Answer >>
  4. What are the differences between product bundling and product lines?

    The difference between product bundling and product lines is a product line is a group of related products manufactured by ... Read Full Answer >>
  5. How do I adjust the rule of 72 for higher accuracy?

    The rule of 72 refers to a time value of money formula that investors use to calculate how quickly an investment will double ... Read Full Answer >>
  6. What are some examples of businesses that use market segmentation?

    Numerous types of businesses use market segmentation to optimize their ability to sell to a wide variety of consumers. From ... Read Full Answer >>
Related Articles
  1. Entrepreneurship

    Why Successful Business Owners Sell Out

    Learn the motives that drive companies into the arms of an acquirer.
  2. Active Trading Fundamentals

    Trade Takeover Stocks With Merger Arbitrage

    This high-risk strategy attempts to profit from price discrepancies that arise during acquisitions.
  3. Investing

    Use Breakup Value To Find Undervalued Companies

    Find out a company's worth if it were sold in pieces - it may be more than you think.
  4. Bonds & Fixed Income

    Trademarks Of A Takeover Target

    These tips can lead you to little companies with big prospects.
  5. Options & Futures

    The Basics Of Mergers And Acquisitions

    Learn what corporate restructuring is, why companies do it and why it sometimes doesn't work.
  6. Fundamental Analysis

    Understanding the Profitability Index

    The profitability index (PI) is a modification of the net present value method of assessing an investment’s attractiveness.
  7. Economics

    What is Neoliberalism?

    Neoliberalism is a little-used term to describe an economy where the government has few, if any, controls on economic factors.
  8. Fundamental Analysis

    Explaining the Monte Carlo Simulation

    Monte Carlo simulation is an analysis done by running a number of different variables through a model in order to determine the different outcomes.
  9. Investing Basics

    Explaining Tender Offers

    A tender offer is a broad public offer made by a person or company to purchase all or a portion of the shares of a publicly traded company.
  10. Economics

    Understanding Limited Liability

    Limited liability is a legal concept that protects equity owners from personal losses due to their ownership interest in the company.

You May Also Like

Hot Definitions
  1. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  2. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  3. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
  4. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  5. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  6. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!