What Does "In Play" Mean?
The term "in play" refers to a firm that becomes a potential takeover target or puts itself up for sale with multiple bidders. When a firm becomes in play, news spreads about the potential deal. Speculation leads the share price to increase in value, making it much more volatile. Once a bid for the firm is made or a sale is possible, a company may attract additional bidders.
Remember—you increase your risk of loss if you make any moves based on speculation.
Understanding "In Play"
Mergers and acquisitions (M&A) are an integral part of the corporate landscape. A larger company often takes over or makes deals with a smaller firm when the latter can add value to an acquirer. Corporations of similar sizes may decide to merge in order to cut down costs or because they want to limit the competition.
Mergers and acquisitions can be hostile. In this case, the target firm is not willing to be purchased, which forces the potential acquirer to adopt aggressive tactics and strategies to meet its goals. In other cases, these deals may be friendly, where one party puts in an offer to purchase another corporation, or one party may put itself up for sale and actively seeks a buyer or bidder.
There are many different nuances in the M&A world. For instance, a firm that is the subject of a takeover—usually by one potential acquirer—is referred to as being in play. This term is also used when a company wants to be purchased and is looking for a buyer. The company in play may be looking for strategic partnerships, or may already have one or multiple bidders in line.
When a firm becomes a potential takeover target, its share price may increase. The market may expect that the stock will trade at a premium before or at the final purchase of outstanding shares. For example, in the late 1980s, management at RJR Nabisco made a bid to take the company private in the course of a hostile takeover attempt. This bid put the company in play, and the resulting bidding war elevated the offer ultimately approved by the RJR Nabisco board.
Key Takeaways
- Being in play means a firm becomes a potentialtakeovertarget or puts itself up for sale.
- When a firm becomes in play, news spreads about the potential deal, leading its share price to rise.
- The share price volatility of a company in play is caused by speculation.
Special Considerations
There may only be rumors that a company is in play. Or there may only be a chance that it's part of a potential merger deal or acquisition, or another type of buyout. At this point, its shares may be referred to as deal stock. These are shares in a public company that may be merged into those of another firm.
As mentioned above, the news that triggers the point when a company is in play is generally only speculative, leading the share price to become more volatile. Being in play normally causes the share price to rise quickly, leading to a potential buyer who may be willing to buy shares at a premium. This may allow the firm to identify prospective buyers or bring more bidders to the negotiating table.
FAQs
Corporate finance is a branch of finance that focuses on how corporations approach capital structuring, funding sources, investments, and accounting decisions. 1. Its primary goal is to maximize shareholder value while striking a balance between risk and profitability.
How to answer why are you interested in corporate finance? ›
Tips to answer "Why do you want to pursue a career in finance?"
- Showcase your passion. ...
- Highlight your analytical skills. ...
- Discuss the impact. ...
- Emphasize the challenge. ...
- Show your understanding of the industry. ...
- Link it to your skills. ...
- Highlight the potential for continuous learning. ...
- Discuss the potential for growth.
involves the management of money and how an individual, company, or government agency acquires and spends money. This field might include activities like investing, saving, borrowing, lending, and budgeting money.”
How does finance play a role in business? ›
Finance is the function within a business that is in charge of monitoring acquired money, managing current funds, and planning for future expenditures. Therefore, we can say that finance passes through every part of a firm's operations. Simply put, without finance, there is no business.
How hard is it to break into corporate finance? ›
While there is no single path to enter into the field of corporate finance, previous experience is generally required. This is why many applicants will first begin by qualifying as an accountant, working in investment banking or equity research before transferring over.
What does it mean when you work for corporate? ›
Characteristics of a corporate job. A corporate job refers to employment within a large and often well-established company or corporation. These corporations typically have a hierarchical organisational structure and are engaged in various industries such as finance, technology, manufacturing, healthcare, and more.
Why does corporate finance interest you? ›
If you enjoy working with numbers and you have strong analytical skills, then corporate finance could be the career for you. Those who are good problem-solvers and have a strong attention to detail do well in the area.
What is the best answer to why finance in an interview? ›
Here's an example of how to highlight your educational background in your answer:"I chose to study finance because I realized I was passionate about investing and excellent at investment strategies. I took capital markets, financial accounting, corporate finance, financial modelling, and portfolio management courses.
How to answer why you are interested in working for a company? ›
5 good answers to 'Why do you want to work here? '
- I've known about your company for a long time and really admire it.
- I believe I can make a positive impact here.
- The company's values align with my own.
- I love what I've heard/read about the company culture.
- I admire the company's work ethic and collaborative spirit.
Finance covers the study and management of money, as well as almost any activity relating to money. Finance is a large industry, encompassing lending, banking, forecasting, investing, and a large breadth of other matters related to the distribution and trading of financial assets.
Finance is a term for matters regarding the management, creation, and study of money and investments. It involves the use of credit and debt, securities, and investment to finance current projects using future income flows.
How does finance works? ›
Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting. There are three main types of finance: (1) personal, (2) corporate, and (3) public/government.
What do you mean by corporate finance? ›
Corporate finance is a subfield of finance that deals with how corporations address funding sources, capital structuring, accounting, and investment decisions. Corporate finance is also often concerned with maximizing shareholder value through long- and short-term financial planning and implementing various strategies.
What is the role of a corporate finance manager? ›
Finance manager job description
As Finance Manager, your responsibilities will include overseeing end-to-end finance operations, financial planning and analysis, balance sheet reconciliations, looking to make improvements to procedures and controls, as well as ad-hoc projects and requests as and when they come up. '
What are the three core goals of a successful business? ›
While the strategies and tactics may vary, three core pillars consistently emerge as the keys to achieving long-term prosperity: operational excellence, customer relations, and financial management.
Is corporate finance a good career? ›
Corporate finance jobs are more plentiful and less competitive than investment banking jobs. Corporate finance still offers an excellent career in business analytics and corporate culture to those who value their weekends, holidays, and evenings.
What skills are required for corporate finance? ›
Skills Needed:
- Problem solving and analytical skills.
- Research skills.
- Critical thinking skills.
- Attention to detail.
- Strong written and oral communication skills.
- Strong quantitative background.
- Time management and ability to multitask.
Examples of Corporate Finance
Executing an initial public offering (IPO). An IPO is undertaken when a privately funded company decides to be listed on a stock exchange so that it can access funding from capital markets. Getting a credit rating. A good credit rating will often lead to better borrowing conditions.
What is an example of a job title in corporate finance? ›
Common corporate finance positions titles include financial analysts, who work to interpret the data and create reports; directors of finance, who work to ensure everything is in order in the team; finance managers, who oversee the creation of advice for maximizing profits and decreasing losses; CFOs, who speak ...
