Standstill Agreement

Description of Standstill Agreement. Explanation.

Definition Standstill Agreement. Description.

A Standstill Agreement is used by a corporation that is the target of a (hostile) takeover to limit the number of shares that the potential acquirer can purchase for a certain time period. In many cases, the target firm purchases the potential raider’s shares at a premium price.

Regular shareholders tend to dislike this type of agreements, because it limits the potential returns on investment available through takeover. On the other hand, shareholders are typically offered higher holdings and benefits by the target firm.

Compare with: Anti Hostile Takeover Mechanisms

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End of description Standstill Agreement. An explanation.