Godfather Offer


DEFINITION of 'Godfather Offer'

An irrefutable takeover offer made to a target company by an acquiring company. Typically, the acquisition price's premium is extemely generous compared to the prevailing market price. Therefore, if the target company's management refuses the offer, shareholders may initiate lawsuits or other forms of revolt against the target company for not performing their fidiciary duty of looking out for the best interests of the shareholders.

BREAKING DOWN 'Godfather Offer'

The offer is even harder for the target company's management to refuse when its stock price has been flat or declining for an extended period of time, as long-time investors would jump at the opportunity to cash out at an elevated price.

Similar to the famous Godfather in the trilogy of movies, the bidding company is essentially making an offer the target company cannot afford to refuse.

  1. Acquisition

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

    A corporate action where an acquiring company makes a bid for ...
  3. Counteroffer

    A type of offer made in response to another offer, which was ...
  4. Sweetheart Deal

    A merger, a sale or an agreement in which one party in the deal ...
  5. Acquisition Premium

    The difference between the estimated real value of a company ...
  6. Target Firm

    A company which is the subject of a merger or acquisition attempt. ...
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  1. How long does it take to execute an M&A deal?

    Even the simplest merger and acquisition (M&A) deals are challenging. It takes a lot for two previously independent enterprises ... Read Full Answer >>
  2. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>
  3. What are some common accretive transactions?

    The term "accretive" is most often used in reference to mergers and acquisitions (M&A). It refers to a transaction that ... Read Full Answer >>
  4. Are companies with high Book Value Of Equity Per Share (BVPS) takeover targets?

    Companies with high book value of equity per share (BVPS) can be good takeover targets if those companies are public and ... Read Full Answer >>
  5. What are some ways to make a distribution channel more efficient?

    While there are many ways to make a distribution channel more efficient, the three high-level ways to increase the efficiency ... Read Full Answer >>
  6. If a company offers a buyback of its shares, how do I decide whether to accept the ...

    Tender offers for share buybacks are often made at a premium to the current market price; it may be in an investor’s best ... Read Full Answer >>

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