Confused about these IB and M&A terms... please help!

yytseeker's picture
Rank: Monkey | 61

Hey everyone, I am extremely interested in finance and have started to read up on it daily. I am quite early in dealing with all this so please overlook my inexperience.

I have an internship and a business development firm that works with investment bankers, mergers and acquisitions, and the like. But I have come across a few terms that I just can't completely understand. I have been financial or whatever but still am confused. Can someone here please give me a more comprehensive and better definition of these terms:

-mortgage backed securities
-reverse mergers
-public shells

any feedback is greatly appreciated!!

Comments (2)

Sep 10, 2008

MBS... anybody who is even remotely interested in finance should be familiar with this term, so I'm not going to explain it.

I'm working on a RTO deal right now, so I'll give you a brief run-through...

An RTO is a method of going public, alternative to an IPO.

In a normal merger, a large company takes over a smaller company (i.e. Sony takes over Bose). In a RTO, a smaller, private company will take over a larger company via a stock offering (i.e. 30 Bose shares for 1 Sony share). Therefore, after the acquisition, despite that Bose acquired Sony, share beneficiaries (past Sony shareholders) will have more Bose shares than pre-existing Bose shareholders - in this way, Sony retains control and Bose becomes a publicly traded company.

A public shell is similar to a SPAC - a publicly-held empty company created solely for the purpose of an acquisition.

Sep 10, 2008