Types of Takeovers
Takeovers in business have multiple types, depending on the interests of the buyer and the seller. Some of the most common takeovers are:
- Merger: A merger occurs when two corporations unite to become a single entity. Both companies maintain their brand presence, but the resources are pooled together.
- Acquisition: An acquisition is a form of takeover, where one company’s assets and ownership are bought by another company.
- Consolidation: Consolidation is when two or more businesses join forces to become a single, larger entity.
- Divestment: Divestment is the opposite of a traditional takeover, where an acquiring company buys a subsidiary and then sells off its assets to pay down debt or boost its bottom line.
- Hostile Takeover: A hostile takeover typically involves an unwelcome takeover attempt by an outside investor.
Legal and Financial Aspects of a Takeover
When companies pursue a takeover, there are many legal and financial considerations to take into account. Companies must research the legal statutes surrounding takeovers, which vary between different nations. In addition, acquirers may have to pay a significant premium to purchase the target company’s stock. Great care is also required to ensure the target company fits with the acquirer’s operations and goals.
Case Studies of Successful Takeovers
Takeovers can be beneficial for companies seeking growth and scale. To demonstrate the success of a takeover, consider the success story of Ford Motor Company’s acquisition of Jaguar. The acquisition of a luxury car brand such as Jaguar allowed Ford to gain a foothold into the luxury market. Thanks to its efficient use of resources, the combined entity looked to drive more profits in the market.
