Standstill Agreement Definition

Standstill Agreement Definition thumbnail
A corporate standstill agreement involves hostile takeovers.

In the world of debtors and creditors, standstill agreements are renegotiated loan agreements wherein the lender agrees to accept less than the original loan amount to avoid receiving even less in foreclosure or bankruptcy proceedings. Corporate standstill agreements have a different definition.

  1. Corporate Standstill Agreement

    • A standstill agreement is a contract between the target of a hostile takeover and the company attempting the corporate takeover. The agreement is designed to stop the hostile takeover process.

    Hostile Takeover

    • A hostile takeover occurs when an outside company seeks ownership of a company that does not want to be taken over. One hostile takeover method involves buying-out the majority of the target company's' shares.

    How Standstill Agreements Work

    • The target company offers the company seeking takeover something of value in exchange for a standstill agreement. For example, the target company may offer to pay above-market prices for the hostile company's shares of its stock if it will enter a standstill agreement.

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