Technical Note | HBS Case Collection | September 2001

Technical Note on Consideration: Floors, Caps, and Collars

by Carliss Y. Baldwin


As equity-linked consideration has become more popular in acquisition and alliances, so has the use of the "price-protection" mechanisms, known variously as floors, caps, and collars. In general, these are contractual agreements that provide insurance to the shareholders of the selling firm, the buying firm, or both.


Baldwin, Carliss Y. "Technical Note on Consideration: Floors, Caps, and Collars." Harvard Business School Technical Note 902-056, September 2001.