Need for Advisory Services in Merger and Acquisition
  • Takeovers
    Concept
    A takeover is really a process wherein an acquirer gets control of control over the prospective company. The acquirer may achieve this with or without the consent from the shareholders. Here are several of these defenses utilized in the U.S, Europe and India

    Pac-man Defence

    This strategy is often employed to prevent a hostile takeover. Here the prospective company counters the takeover bid by trying to get the bidder’s company start by making a counter offer to get the process of the acquiring company. This diverts the interest of the acquirer, who becomes busy in preventing the takeover of his or her own company. The hostile takeover attempt of Martin Marietta by Bendix Corporation in 1982 is a useful one. As a result of the takeover bid, Martin Marietta started buying Bendix stock with the aim of assuming control of the corporation.

    Nancy Reagan Defence

    This course could be the one where the board in the directors from the target company say no to the formal bid produced by the acquirer for the shareholders to purchase their shares. The board of directors hold the authority to stand up to a takeover attempt and the matter ends here. The constitution of the company provides them with this authority. The phrase describes a catch phrase coined by U.S. first lady Nancy Reagan advocating “abstinence from recreational drug use’’.

    Bank Mail

    A bank mail defense strategy is one the place that the bank with the target firm refuses financing options to the firm which is keen on taking it over. This is done with the objective of preventing an acquisition and also by doing these:
    •Depriving the merger through non accessibility to finance
    •Increasing the transaction costs from the acquirer
    •Delaying the takeover and permitting the objective firm to produce other anti-takeover strategies

    The acquiring firm may also put other companies from the fray. For instance, Company A planning to buy Company B may seek a warranty from your bank that it'll either finance Company A’s bid or no bid in any respect. This kind of strategy doubles to close other businesses from your takeover fray.

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    Crown Jewel Defence

    Crown jewel represents probably the most valuable unit or department of an company. They are sorted as crown jewels determined by their profitability, price of assets owned, and future growth prospects. Because they will be the most beneficial parts of the organization, they are often used as a takeover defense. Here the company creates anti-takeover clauses whereby it gets the right to sell the crown jewels in case of a hostile takeover.

    Sandbag

    Sandbag occurs the prospective firm is likely to defer the takeover or acquisition with the expectation that another firm, with better offers, may takeover instead. Put simply, it is the process by which the mark firm “kills time” while waiting for a more eligible firm to initiate the takeover.

    It is really an anti-takeover strategy whereby the target firm issues a charter preventing people with greater than 10% ownership of convertible securities such as convertible bonds, convertible preference shares, and warrants from transferring these securities to voting stock. This charter gets a barrier and hostile takeover becomes difficult. In the event the acquirer enters this trap, it will become difficult to exit as the acquirer can neither acquire controlling stake in the business from the target, nor does it exit through the limited stake acquired.

    Our sophisticated team has complete knowledge of various exercises and technicalities which might be utilized in our services. Our services includes Strategy Consulting, GST Consulting, Asset Management, Feasibility Study, International Arbitration, Due Dilligence, Franchisee Consulting, Financial Audits, Operational Audits, Tax Heaven Registrations, Shareholder Agreements, Start-up Consulting, IP Consulting, Taxation Services, Accounting system design and Mergers Acquisitions.
    Contact at parascs@gmail.com or refer website www.pnjhub.com

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