Business, Legal & Accounting Glossary
A crown gem is the most coveted or valuable asset of a business in terms of profitability and future potential. A business may possess one or many crown jewels. The word dates all the way back to mediaeval periods when kingdoms covered many geographies and owned enormous assets as well as priceless treasures. Over the course of a business’s life, assets may lose their crown jewel status if their profitability declines or new competitors enter the market, jeopardising the asset’s future prospects. As a result, a business must constantly strive to improve and defend its crown jewels.
The crown jewel of a firm is its most valuable asset. In some situations, a company’s crown treasure could be its customer database. Whatever the case may be, these valuable assets might make a company an appealing potential target for a hostile takeover. However, the company can deter such attempts by selling its crown jewels to a trustworthy third party. It might even split off its valued assets into a new corporation. This raises the cost of acquisition and makes it less appealing.
The transfer of crown jewels also results in the dilution of the acquirer’s assets, making it less economical to the third party. However, there is a possible drawback to using crown jewels as a deterrent against hostile takeovers: distress sales of sovereign jewels may fetch significantly less than their actual value.
Asset Purchase Agreement
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This glossary post was last updated: 26th January, 2022 | 5 Views.