What is DISENFRANCHISING TRANSACTION?

A financial restructuring transaction, such as a DUAL CLASS RECAPITALIZATION, that removes voting rights from certain COMMON STOCK investors. DISINTERMEDIATION The process of removing financial institutions, including BANKS, INVESTMENT BANKS, and SECURITIES FIRMS, from their traditional function in intermediating between suppliers and providers of CAPITAL and providing investment and CORPORATE FIANCE advice. If borrowers and investors/lenders can properly identify each other and disintermediate traditional providers, borrowers may be able to realize a cheaper COST OF CAPITAL and investors a greater return, as neither party will be required to pay implicit or explicit intermediation fees. Equally, if companies can arrange their own MEGERS or ACQUISITIONS, intermediaries can be excluded from the role and costs can be reduced. Disintermediation occurs in certain financing and corporate finance transactions, although the overall scope and volume are limited.

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