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Home > QFINANCE Dictionary > Definition of asset stripping

Definition of

asset stripping

Mergers & Acquisitions

practice of selling acquired firm's assets piecemeal the purchase of a company whose market value is below its asset value, usually so that the buyer can sell the assets for immediate gain. The buyer usually has little or no concern for the purchased company's employees or other stakeholders, so the practice is generally frowned upon.

Related definitions of "asset stripping"

Recommended Further Reading (Term count)
  • Issuing Corporate Debt
    by Steven Lowe
    The existence and determination of optimal capital structure is an ongoing topic of research in corporate finance. In a perfect market setting, with no frictions, Modigliani and Miller’s seminal research in 1958 suggested that the market value of a firm is independent of its capital structure. In other words, capital structure does not matter.Miller (1991) explained the intuition for this with a simple analogy: “Think of the firm as a gigantic...
asset stripping - Related Articles
  • Issuing Corporate Debt

    Best Practice

    In an effort to prevent this, most debt issues or bank lending will have covenants attached to prevent the equity holders stripping assets, and hence security, away from the corporation that takes on the debt financing. These covenants exist to restrict stockholders’ freedom of action, and to try to even out
    By Steven Lowe

  • Why Accounting Needs To Be More Business-Centric

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    From a value investor’s perspective this is an asset that they would mentally have to strip out of the accounts to get a more accurate picture of the “true” assets of the business. So this is an example of where a theoretical approach that aims to “look through” concepts to some supposed underlying
    By Andrew Howie

  • Israel and the Palestinian Territories

    QFINANCE Country Profiles

    Israel has a diversified, export-based economy with a strong high-tech bias. The main exports are software, electronics, biomedical goods, polished diamonds, military equipment, and agricultural products. Relatively isolated from its neighbors, its top trading partners are the Palestinian Territories (the West Bank and Gaza Strip, with which peace has been elusive), the United States, the European Union, and China

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Definitions of ’asset stripping’ and meaning of ’asset stripping’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’asset stripping’ and other financial terms with our online QFINANCE Financial Dictionary.

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