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The main types of takeover bids in New York

by | Nov 8, 2021 | Mergers and Acquisitions

In the business world, mergers and acquisitions happen for various purposes. This includes gaining an industry monopoly, expanding into new markets or improving a company’s overall performance. The specific corporate actions that make this possible are commonly referred to as takeover bids, which occur in two forms: hostile takeovers and friendly takeovers. This article looks at each type in more detail below.

What is a takeover bid?

A takeover bid is an action that one company takes to take over another, and it can be either hostile or friendly. One of the main reasons mergers and acquisitions occur is to expand a company’s market share, but this isn’t possible in every case.

What is a hostile takeover bid?

A hostile takeover bid is when one company tries to take over another without the latter’s consent. This is often due to their lack of cooperation, and it can be difficult for companies who receive these bids because they don’t want them in the first place. A proxy vote, which refers to persuading the shareholders of a company to vote out the company’s management and accept an offer for takeover, is often used in these cases.

What is a friendly takeover bid?

In mergers and acquisitions, a friendly takeover bid is when one company takes over another with their consent. This can be due to the latter believing they will benefit from the transaction or because it’s more financially beneficial for them not to remain independent. This means that both sides will work together for this purpose, making things much easier in terms of negotiating company merges or consolidating assets.

There are many other types of takeover bids, including reverse and backflip takeover bids. However, a significant number of mergers and acquisitions throughout history have revolved around hostile and friendly takeover bids.