Friendly takeover

A takeover is simply a situation in which one company is acquired by another company. In such a circumstance, it is possible for the board of the directors of the company being taken over to continue holding key management positions, but it is also quite likely for the acquiring company to take control of key decision-making roles in the company.

Such an arrangement can take place under two circumstances. The first arrangement, which is acceptable to all parties concerned, is known as a friendly takeover. The occurrence of such an event means that the management of the company being acquired is amenable to the offer of the acquiring company.

The interested party should first get in contact with the board of directors of the target company. The board then assesses the proposal and informs the shareholders if the members of the board believe the proposal to be advantageous to all stakeholders. It is quite common for the company’s shareholders to be fully involved in the vote to approve of proposed mergers or acquisitions.

One of the most important things shareholders might consider is the price being proposed for each share held. The acquiring company can base their proposal for this on a variety of factors, such as the desirability of the target company and its potential for profit and growth, among other things.

The opposite of a friendly takeover is known as a hostile takeover. In such a situation, the acquiring party may decide not to inform the target company’s board of directors before making the offer, or it may be relentless in its attempts to buy out the company despite rejections from the target company’s management.