toehold purchase

Definition

The act of buying less than 5% of a company's outstanding stock as a possible precursor to a subsequent larger purchase. When 5% or more is accumulated, the SEC and the target must be notified.

Use toehold purchase in a sentence

You may want to try and take on a toehold purchase if you think that it could be a good earner for you.

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It was the toehold purchase that we were making and that was supposed to lead to a bigger one in the future.

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toehold purchase A purchase of less than 5% of a TARGET company's outstanding stock made by an acquiring company. A toehold purchase of just under 5%, while not a significant stake in a firm, allows the shareholders a "toe-holds" grip on the company and its decision making. In the instance of a shareholder vote, toehold shareholders hold a significant place in such votes.

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