asset stripping


asset stripping
The acquisition of a firm for a price that is well below its total asset value, and the subsequent sale of these assets. This may occur either because a particular asset, such as property, is valued in the firm's balance sheet at well below its potential market price, or because the firm has been poorly managed, in which case the low share price does not reflect the true value of the firm. After acquisition the assets of the firm are sold to third parties for significantly more than the purchase price of the assets. Because little or no consideration is given to the interests of other stakeholders, such as employees, suppliers, or customers, the practice is viewed critically.

Big dictionary of business and management. 2014.

Look at other dictionaries:

  • asset-stripping — ˈasset ˌstripping verb [uncountable] FINANCE the practice of buying a company whose shares are worth less than its assets, then selling its assets in order to make a quick profit: • The new owners turned out to be more interested in asset… …   Financial and business terms

  • Asset stripping — involves selling the assets of a business individually at a profit. The term is generally used in a pejorative sense as such activity is not considered productive to the economy. Asset stripping is considered to be a problem in economies such as… …   Wikipedia

  • asset stripping — Where a business is acquired and the assets are sold off separately to realise a profit. Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010 …   Law dictionary

  • asset stripping — asset .stripping n [U] the practice of buying a company cheaply and then selling all the things it owns to make a quick profit used to show disapproval …   Dictionary of contemporary English

  • asset-stripping — ► NOUN ▪ the taking over of a company in financial difficulties and selling each of its assets at a profit …   English terms dictionary

  • asset-stripping — assˈet stripping noun (now usu derogatory) The practice of acquiring control of a company and selling off its assets for financial gain • • • Main Entry: ↑asset * * * ˈasset stripping [asset stripping] noun …   Useful english dictionary

  • asset stripping — A pejorative term for the deliberate depletion of *assets in an organization. Asset stripping often occurs following an *acquisition (definition 2), when an acquirer believes that the breakup of a purchased organization’s assets can enhance their …   Auditor's dictionary

  • Asset Stripping — The process of buying an undervalued company with the intent to sell off its assets for a profit. The individual assets of the company, such as its equipment and property, may be more valuable than the company as a whole due to such factors as… …   Investment dictionary

  • asset-stripping — N UNCOUNT (disapproval) If a person or company is involved in asset stripping, they buy companies cheaply, sell off their assets to make a profit, and then close the companies down …   English dictionary

  • asset stripping — The acquisition or takeover of a company whose shares are valued below their asset value, and the subsequent sale of the company s most valuable assets. Having identified a suitable company, an entrepreneur would acquire a controlling interest in …   Accounting dictionary