Financial Glossary: War Chest


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War Chest

War Chest

Slang term for the reserve of Cash a Corporation keeps aside to attempt a takeover or to defend against a hostile takeover.

For example, we may hear, "Look for ABC Company to make an Acquisition soon; they've been selling off assets in order to build up their war chest." It is the money set aside to deal with unexpected changes in the business environment.Companies rarely have a war chest anymore, relying instead on quickly raised Debt which costs nothing to carry when you don't need it. This is not always a reasonable substitute, as the Debt available to a company typically drops as a result of the same actions that require the war chest to be opened.

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