When your significant other fakes a headache at the office holiday party so you can get out of there and get back to binging Unbreakable Kimmy Schmidt at home. One form of exit strategy.
In finance, the exit strategy is the second half of making money from a trade. Many investors spend a lot of time figuring out what stocks to buy. But you need to sell the stock eventually to book a profit. Sometimes harder than it sounds.
An exit strategy is all about this end of the trade. It's about getting out of a position profitably and having a contingency plan for different situations.
You buy shares of Tiger Phone Inc., a maker of cheap cell phones, at $10 a share. The exit strategy should depend on why you bought the stock.
If you bought the stock because you expect a strong response to the upcoming release of its Siberian X model, then you might look to sell ahead of the launch. Wait too long, and you might miss your window.
Meanwhile, if you did fundamental research and found that, based on earnings and revenue, the company should be valued at $12 a share, your exit strategy might be to wait until the stock hits that level and then sell.
But what if it dips to $9? Maybe you buy more shares, with the idea that it has even more value at the lower price. Or maybe you sell in order to limit any losses, in case you were wrong about your initial assessment. All these contingencies are part of developing a cogent exit strategy.
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Finance: What's the difference between m...22 Views
Finance allah shmoop what's the difference between mergers and acquisitions
all right people listen up Merger that's what's about to
happen here it's a merger acquisition that's what's about to
happen here Corporate america is kind of same thing when
two companies merge while they generally you know attracted to
each other hopefully respect each other they share stock or
combined the stocks of each side and you know combine
efforts and then and then cuddle afterwards if they're successful
at the merger than the combination of two roughly equals
yields more than the one plus one combo that made
them so two companies get together on generally equal ish
footing In that case acquisitions are a combining more like
that eating thing on much different footing The large company
eats or buys the target either using its more highly
valued stock currency or it's taft to do so Well
why would a company acquire another Well the target might
have one hundred employees ninety of whom can be fired
with massive expense savings after the acquisition For the acquirer
such that economically the acquisition won't just makes a whole
lot of financial sense acquisitions happen for market power reasons
As well like imagine the negotiating leverage that amazon would
have if it bought the next five biggest online retailers
Or maybe it'll just kill them Probably not legal for
them to buy him anyway given the monopoly like dominance
of amazon these days But wow that would be a
powerful set of acquisitions And that would be a good
reason for ems on to acquire a whole bunch Things
and bezos would grow even more powerful maybe too powerful
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