What in Business Is a Takeover?
The purchasing of a company (the target) by another (the acquirer) is known as a takeover. Usually by acquiring the majority of the target’s stock, the acquiring company assumes control over the target’s operations.
Types of Takeovers
Various types of business takeovers exist, contingent upon the mutual interests of the buyer and seller. Several of the most typical takeovers include:
- Merger: A merger is the coming together of two corporations into one. Both businesses continue to market their brands, but they share resources.
- Acquisition: An acquisition is a type of takeover in which the ownership and assets of one company are purchased by another.
- Consolidation: The merging of two or more companies into one bigger organization is known as consolidation.
- Divestment: Divestment is the reverse of a traditional takeover, in which the acquiring business purchases a subsidiary and then sells off the subsidiary’s assets to reduce debt or increase profits.
- Hostile Takeover: An outside investor attempting an unwanted takeover is usually the cause of a hostile takeover.
The Financial and Legal Aspects of a Takeover
There are a lot of financial and legal factors to consider when businesses pursue a takeover. Businesses need to learn about the takeover laws, which differ from country to country. Acquirers might also need to fork over a sizeable premium in order to buy target company stock. Making sure the target company aligns with the operations and goals of the acquirer also requires careful consideration.
Case Studies of Successful Takeovers
Acquisitions can be advantageous for businesses looking to expand and get bigger. Take the success of Ford Motor Company’s acquisition of Jaguar as an example of a takeover gone right. Ford was able to enter the luxury market through the purchase of a high-end automaker like Jaguar. The combined company aimed to increase market profits due to its effective use of resources.
