This can cause an organizational void or a reshuffle that in some cases can even change the viability of the company.

Secondly, when a raider takes over a target company against the wishes of its board, then it can lose its top executives as a result.

So, after the acquisition, it may find out that there are more hidden debts or technical problems with the target company that can eventually prove to be detrimental to the acquirer. In the case of a hostile takeover, however, the acquirer only has information that is publicly available about the target company. Thus, when an acquirer silently and unilaterally, makes efforts to gain control of a company against the wishes of the existing management, such act amounts to. A hostile takeover occurs when the targeted companys management or board of directors does not approve of the transaction. But what factors need be present in the target and the bidder firms for hostile takeovers to occur Conflicts of interest between the target firms management. This helps the acquirer to make informed buying decisions. Firstly, in any merger agreement that is mutually agreed upon by both parties, all information pertaining to the target company is disclosed.

The acquirer can choose one of these methods or may choose a combination, depending on the resistance of the target company.ĭespite these efforts, a hostile takeover may not always be an advantage to the acquirer for several reasons. Sometimes, the entire board may not need replacing, just the opposing members need to be replaced. Find 3 ways to say HOSTILE TAKEOVER, along with antonyms, related words, and example sentences at, the worlds most trusted free thesaurus. A better option is to start a proxy war where the acquirer convinces a majority of shareholders to replace the management of the target company with another one that is more accepting of this acquisition. Or, the acquirer may try to gain majority ownership through the buying of shares in the open market however, this may be an expensive route for the acquirer and there is no guarantee that it will mean a successful acquisition. The acquirer then initiates the takeover by offering a 'tender,' which is a certain fixed price over the current market price of the shares of the target company. Typically, in a hostile takeover, the raider persists even after the board of directors and shareholders of a target company reject an initial offer.

What is a hostile takeover