Collar (M&A Glossary)

Summary

A collar is used in a stock purchase to set a floor (downside) and a cap (upside) on the equity portion of the purchase price for the target. The “width” of the collar shows what fluctuation of the value of the buyer’s stock is acceptable to the seller. A collar often comes at a cost to either the buyer or the target. Two pairs of upside and downside collars are sometimes referred to as a “double collar.”