Predator

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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.

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