The stock exchange is another foreign term, namely stock swaps. In common people’s circles, of course, this term is not well known. Early people, of course, felt unfamiliar with the term stock swap. Indeed, this term is found in the capital market environment and is synonymous with buying and selling stocks. In other words, this term is more recognized by every party who is involved in shares.
It is also related to the company’s finances, which also include stock swaps. What this stock swap means may be a question for all of you. Not only the meaning of this term may be curious. But it is possible that you also want to know the procedure for this. It is possible that the procedure regarding the exchange of shares you want to know more about. To find out, you can see each explanation or description below.
Definition of Stock Exchange
As previously discussed, the term stock swap is not a word found by ordinary people. But as the name implies, this is related to stocks related to the capital market and the like. This stock exchange or stock swap can be interpreted according to the name of the term itself. It refers to the exchange of one equity-based asset with another. In this case, it seems that other processes can also occur. For example, during the merger or acquisition process. This swap or exchange provides an opportunity for you to make a payment. The payment referred to here is a payment made using shares. So payments are not made using cash.
Stock Exchange in Companies
One of the things that need to be understood from the existence of the stock exchange or swap of shares is the involvement of the company. Generally, this happens to companies that carry out the acquisition process. Of course, this also involves activities in the acquired company. Some companies may be close to the term acquisition which means in it there is a transfer of power. In this case, the acquiring company usually uses its shares as cash. The use of this cash to make business purchases. If this happens to the acquiring company, will happen different things from the acquired company.
Acquired companies, will usually be acquired and will receive a predetermined number of shares. The shares received must have come from the acquiring company. The process of exchanging or swapping shares occurs by involving several valuations. This also includes market value and investment value as well as intrinsic value. These three values should also be determined to support the course of stock exchanges or swaps. The swap process is also always expected to happen accurately. Then later the data swap ratio is calculated correctly.
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Stock Exchange Procedure
It is well known that this exchange or swap of shares occurs in acquired and acquired companies. However, the occurrence of this swap process is definitely in line with the existing procedure. It starts from the calculation of the swap ratio which is then agreed upon by the parties related to it. Then comes a fair ratio until the shareholders have a share of the shares of the new company.
The viewer of this share of the stock will certainly make various efforts to find out the value of the stock. Because the value will be related to the process of buying and selling shares. In other words, the value of this stock also determines how big the profit or maybe even the size of the loss is.
Here the company that makes the acquisition or the company that acquires needs to add additional intensive. This additional intensive occurs in the form of shares with the aim of the takeover process. It means that there is the certainty that the board of directors of the acquired company approves the takeover process that occurs. If this has happened, a stock swap could occur.
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Stock Exchange Process
The process of swap realization occurs in the presence of new shares received by the shareholders. Until the shares were owned by the new company. But, this process takes place accompanied by the presence of certain agreements. For example, an agreement that does not allow new shareholders to sell shares.
This share sale agreement is prohibited for a certain period. This aims to avoid a sudden decline in the stock price. Indeed, this is often a kind of strategy for a company. This strategy is carried out to anticipate an inappropriate takeover process. Because it could be that this takeover process is accompanied by a bad goal. So if the anticipation is made, it is absorbed so that this takeover process can take place without incident. In addition, the process of exchanging shares generally also occurs internally, namely within the company.
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Some companies seem to undergo stock exchange or swap procedures like this. It also serves as a strategy for some companies around you. It happens when stock options appear offered to employees. The price of the shares usually tends to be low. Until this stock seems to have become more and more worthless because the price is too low. Here company allows its employees to exchange these worthless shares for shares that have a higher value.