DEFINITION of 'Predator'

In mergers and acquisitions, a company with sufficient financial means to easily bear the risks associated with acquiring other companies. Predators are considered to be the financially strong company in the merger or acquistion. The weaker acquisition targets are sometimes called "prey," because they can be snatched up by more powerful firms. Many firms fall somewhere in the middle of these extremes.

BREAKING DOWN 'Predator'

Although strategic acquisitions can be a great way to expand, there is considerable financial risk involved. Careful analysis must be performed to ensure that the acquiring company does not overpay for the target. In addition, considerable due diligence must be performed to ensure that there are no surprises lurking in the target company. Finally, it may take considerable financial capital to restructure and consolidate the two companies into one cohesive unit once the acquisition is complete.

RELATED TERMS
  1. Mergers And Acquisitions - M&A

    A general term used to refer to the consolidation of companies. ...
  2. Acquisition Premium

    The difference between the estimated real value of a company ...
  3. Acquisition

    A corporate action in which a company buys most, if not all, ...
  4. Merger Mania

    A period of time with significant merger and acquisition activity ...
  5. Swap Ratio

    The ratio in which an acquiring company will offer its own shares ...
  6. Busted Takeover

    A highly leveraged corporate buyout that is contingent upon the ...
Related Articles
  1. Investing

    What Investors Can Learn From M&A Payment Methods

    How a company pays in a merger or acquisition can reveal a lot about the buyer and seller. We tell you what to look for.
  2. Small Business

    What Merger And Acquisition Firms Do

    The merger or acquisition process can be intimidating. This is why merger and acquisition firms step in to facilitate the process.
  3. Investing

    The Wonderful World Of Mergers

    While acquisitions can be hostile, these varied mergers are always friendly.
  4. Investing

    The Merger - What To Do When Companies Converge

    Learn how to invest in companies before, during and after they join together.
  5. Investing

    The Merger: What To Do When Companies Converge

    Mergers occur when it’s beneficial for two companies to combine business operations. The question is; if you’re invested in a company that’s involved in a merger, will it benefit you?
  6. Small Business

    What's an Acquisition?

    In corporate terms, an acquisition is the purchase of a company or the division of a company. Some acquisitions are paid in cash, while others are paid with a combination of cash and the acquiring ...
  7. Investing

    What Happens To The Stock Prices Of Two Companies Involved In An Acquisition?

    When one firm buys another, the effect is predictable. The acquiring company’s stock falls in value, while the target company’s climbs.
  8. Insurance

    Key Players In Mergers And Acquisitions

    Strategic acquisition is becoming a part of doing business. Discover the different types of investor groups involved.
  9. Financial Advisor

    Acquire A Career In Mergers

    This exciting sector demands a lot from its advisors. Are you up for it?
  10. Investing

    How The Big Boys Buy

    Learn what those in-the-know look for when acquiring a company.
RELATED FAQS
  1. What's the difference between a merger and an acquisition?

    Learn about the difference between mergers and acquisitions. Discover what factors may encourage a company to merge or acquire ... Read Answer >>
  2. What is the difference between a merger and an acquisition?

    Read about the legal and practical differences between a corporate merger and corporate acquisition, two terms often used ... Read Answer >>
  3. Why do some mergers and acqusitions fall through?

    Most merger and acquisition (M&A) activities are carried out successfully, but from time to time, you will hear that a deal ... Read Answer >>
  4. Why are the terms 'merger' and 'acquisition' always used together if they describe ...

    Learn about mergers and acquisitions and how these two corporate actions differ based on the size and participation of the ... Read Answer >>
  5. What happens to the stock prices of two companies involved in an acquisition?

    When a firm acquires another entity, there usually is a predictable short-term effect on the stock price of both companies. ... Read Answer >>
  6. Are acquisitions only for large companies?

    Learn how mergers and acquisitions, despite what the media portrays, actually take place more often among small companies ... Read Answer >>
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center