A Primer On Bootstrap Acquisitions

Law360, New York (March 18, 2014, 2:07 PM EDT) -- If the target needs to effect a bootstrap acquisition to reduce its equity value before the acquisition, it can do so in a number of ways.

Pre-Closing Distribution of Assets. The target can distribute its assets to its shareholders before the acquisition. For example, a corporation worth 100 could reduce its equity value to 80 by distributing 20 of assets. The remaining equity can then be acquired for a purchase price of 80.

Pre-Closing Debt-Financed Distribution. The target can also reduce its equity value by borrowing...
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