Cool terms is back and bad, I mean, good. This favourite regular feature explores the cornicopia of inventive expressions used in the business and legal markets, which all good corporate lawyers should be aware of:
A "bear hug" is an exceedingly good offer for the shares of a target company made directly to its board of directors. This offer, at a price much higher than the actual value of the shares, is aimed to encourage an unwilling board to sell their shares. In fact, the duty on directors to act in the best interests of the members of the company, means that the directors are effectively forced into accepting the offer. The bear hug squeezes an agreement out of reluctant directors wary of breaching their fiduciary duties. This is not to be confused with the 'inverted bear hug'; where one wrestler locks his hands behind his opponent's lower back and presses his forehead into their sternum.
Another cool term from the investment world is "golden handcuffs". This is where an employee is incentivised to stay with the company on the basis of future reward, for example, an employee may be required to relinquish any unvested stock options if he terminates his employment early.
Also found in investo-speak are the cool terms: "Lemon", which is an investment with a poor or negative rate of return (i.e. "lemons ripen before plums"); and "Plum", which is an investment with a healthy rate of return (i.e." plums ripen after lemons"). So if you hear an investor boasting about the size of his plums, don't turn away like a sour lemon.
Corporate Blawg would be interested to hear of any situations where directors have been placed in a bear hug with golden handcuffs made of plums.
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