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. Chapter 7

    A bankruptcy proceeding in which a company stops all operations ...
  4. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  5. Raider

    An individual or organization that tries to take over a company ...
  6. Asset

    1. A resource with economic value that an individual, corporation ...
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. Bonds & Fixed Income

    Trademarks Of A Takeover Target

    These tips can lead you to little companies with big prospects.
  4. 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.
  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. Economics

    What is Value Added?

    Value added is used to describe instances where a firm takes a product and adds a feature that gives customers a greater sense of value.
  7. Economics

    What is a Wholly Owned Subsidiary?

    A company whose common stock is 100% owned by another company, called the parent company.
  8. Economics

    Understanding Specialization

    Specialization is when a person, business, or region focuses their productive efforts on a smaller subset of a larger system for a competitive advantage.
  9. Economics

    Vietnam -- New Asian Hot Spot For Tech Investment

    Vietnam now has a rapidly expanding tech sector that's attracting investors from around the globe due to low business costs and highly skilled workers.
  10. Personal Finance

    How Youtube Ad Revenue Works

    Many people make money off of their YouTube videos through ad revenue, but just exactly how does Youtube Ad Revenue work? Quite simply, it turns out.

You May Also Like

Hot Definitions
  1. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  2. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  3. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  4. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  5. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
  6. Absorption Costing

    A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption ...
Trading Center