Squeeze out

Squeeze out or freeze-out is a term referring to the compulsory acquisition of the stakes of a small group of shareholders from a joint-stock company by means of cash compensation.

This technique allows one or more shareholders who collectively hold a majority of shares in a corporation to gain ownership of remaining shares in that corporation. The majority shareholders incorporate a second corporation, which initiates a merger with the original corporation. The shareholders using this technique are then in a position to dictate the plan of merger. They force the minority stockholders in the original corporation to accept a cash payment for their shares, effectively "freezing them out" of the resulting company.