Contingent Value Rights - CVR

AAA

DEFINITION of 'Contingent Value Rights - CVR'

A type of right given to shareholders of an acquired company (or a company facing major restructuring) that ensures they receive additional benefit if a specified event occurs. A contingent value right is similar to an option because it often has an expiration date that relates to the time the contingent event must occur.

INVESTOPEDIA EXPLAINS 'Contingent Value Rights - CVR'

For example, shareholders of an acquired company may receive a CVR that enables them to receive additional shares of the target company in the event that target company's share price falls below a certain level by a specified date.

Another example of a CVR would be for a target company to set aside a large sum of money that would be transferred to the shareholders of the acquired company in the event that the price of the target company's shares do not meet a certain target or fall below a specified price.

RELATED TERMS
  1. Acquisition

    A corporate action in which a company buys most, if not all, ...
  2. Call Warrant

    A financial instrument that gives the holder the right to buy ...
  3. Warrant

    A derivative security that gives the holder the right to purchase ...
  4. Expiration Date

    The last day that an options or futures contract is valid. When ...
  5. Target Firm

    A company which is the subject of a merger or acquisition attempt. ...
  6. Put Warrant

    A type of security that gives the holder the right (but not the ...
Related Articles
  1. Warrants: A High-Return Investment Tool
    Options & Futures

    Warrants: A High-Return Investment Tool

  2. Understanding Rights Issues
    Options & Futures

    Understanding Rights Issues

  3. The Basics Of Mergers And Acquisitions
    Options & Futures

    The Basics Of Mergers And Acquisitions

  4. Analyzing Warren Buffett's 2013 Famous ...
    Economics

    Analyzing Warren Buffett's 2013 Famous ...

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center