Asset stripping

Encyclopedia : A : AS : ASS : Asset stripping

Asset stripping is the practice of buying a company in order to sell its assets individually at a profit.

Boaters accuse the proposed sale of the Jericho Boatyard as "asset stripping" the government body British Waterways.

Asset stripping is also sometimes used to describe the practice of investors dealing directly with armed militant groups in developing nations to take direct control of assets that legally belong to the state or commons or any group in society that the investor and armed militant can effectively coerce. It has led to deforestation in Africa and Colombia and to other harmful effects.

Asset Stripping in Literature and Pop Fiction

In the Business (Gothic) thriller The Poison Pill, author Marciano Guerrero highlights an extreme case of the poison pill technique. When the raider fails in her takeover bid, the CEO resorts to violence even knowing that in the end the only poison pill available is death. The villain--Helen McCain--as CEO of Orbis Laboratories has a track record of numerous takeovers (friendly and hostile); her main technique being Asset stripping. By targeting companies that own rich intangible assets such as patents, copyrights, and tradenames, she weakens them by using nefarious tactics. After she acquires them for twenty cents on the dollar, she sells all the current and plant assets. Next she integrates into her balance sheet the rich intangible assets. It is insightful for the public to learn the plotting and underhanded tactics used by both the raider and the defender. The irony of the novel is that in the end--in a surprising twist--the target company (Bates Pharmaceuticals led by Ivon Bates, a naive MIT scientist) buys out the raider!

Jim Friedman on a United Nations panel on exploitation of natural resources in the Democratic Republic of Congo, listed this as one of several key concerns in "investment and human rights".^{[[Citing sources citation needed]]}

From Wikipedia, the Free Encyclopedia. Original article here. Support Wikipedia by contributing or donating.
All text is available under the terms of the GNU Free Documentation License See Wikipedia Copyrights for details.