Are you considering an acquisition or corporate takeover? If so then you should get all the facts from Yair Hamami so you’ll know whether or not your company should be involved in one. It’s important to note that a corporate takeover is a little different than a standard acquisition. Here are some key facts:
- A hostile takeover involves an acquirer buying a target company
Yair Hamami reports this is one of the most important facts that involve the process. There are a few ways this happens. Sometimes the purchasing company goes to the shareholders of a company and tries to work out a deal with them.
However, in another case, the acquiring company tries to replace the target company’s management in order for the acquisition to be approved. The entire process can be done through a proxy fight or tender offer.
The fact involving the hostile takeover is the management of the target company doesn’t want the deal to be completed. There are various reasons this might be the case. Yair Hamami notes that there are steps the company can take to prevent the hostile takeover. They include the poison pill, golden parachute, crown-jewel defense, and Pac-Man defense. These are all common methods so it’s important to know them in case your company is involved in a hostile takeover.
- There is a defense of preemptive takeovers
Companies can create stock shares that have differential voting rights (DVR). A stock that has less voting rights ends up paying a higher dividend. It’s a good investment. However, it can be tough to get enough votes for a hostile takeover.
Another defense involves creating an employee stock ownership program (ESOP). This is a tax plan that lets workers own big interest in the company. In that case, it’s more likely they’ll vote with management. That’s why it can be a very successful defense.
In the case of a crown jewel defense, a provision found in the company’s bylaws makes it necessary to sell the company’s most valuable assets in the case there’s a hostile takeover.
Yair Hamami reports it’s important to be aware of these critical facts about hostile takeovers in case you find you company involved in one.
- A tender offer or proxy fight is involved
These are two common situations that can occur during the process of an attempted hostile takeover. The offer might be rejected when a company makes a tender offer at a price tag that’s at a premium higher than the market value.
Yair Hamami shares when the offer is rejected the purchasing company can then give the offer to the shareholders directly. They might accept it if it’s at a premium that’s high enough compared to market values, or they don’t want to deal with the current management. The sale of stock shares only transpires if enough stockholders accept the offer made.
Then there’s a proxy fight. Two competing groups of stockholders talk other stockholders into letting them vote their stock shares. If a hostile takeover company gets enough proxies the company can then use them to vote in favor of the effort. This is an issue that’s explained by Yair Hamami.