What is a takeover?
A takeover is a process by which one company acquires another. Takeovers principally take place through the purchase of company’s stock, assets, or other securities of the company. The acquiring company becomes the new owner of the acquired company and assumes operational control. Takeovers can be initiated by the acquiring company or as a result of a proposal made by the target company. Takeovers can benefit businesses by allowing them to expand their operations, increase their market share, and gain access to new technologies or resources. They can, however, be a source of concern for the acquired company’s employees, customers, and shareholders.
Types of takeover
Takeovers are classified into two types: hostile and friendly.
1. Hostile takeover
When an acquiring company attempts to acquire the target company against its will, this is referred to as a hostile takeover. In this case, the target company’s management and board of directors are opposed to the takeover and may attempt to prevent it.
As the acquiring company attempts to gain control of the target company’s assets, hostile takeovers can result in legal battles.
2. Friendly takeover
A friendly takeover, on the other hand, occurs when the target company agrees to the acquisition by the acquiring company. In this scenario, the target company’s management and board of directors are open to and may even welcome the idea of being acquired. In both cases, the acquiring company must pay a premium for the target company’s shares or assets.
This premium is intended to compensate target company shareholders for the loss of control over their shares. The price offered may vary depending on market conditions, the target company’s financial health, and other factors. Investors, employees, and other stakeholders must understand the distinction between hostile and friendly takeovers. While friendly takeovers are less contentious, they still necessitate careful planning to ensure that both companies benefit from the transaction.
The impact of takeovers on companies and employees
Takeovers can have a large impact on the companies involved as well as their employees. In some cases, takeovers can result in the merger of two companies, which can result in layoffs and workforce restructuring. Employees who are concerned about losing their jobs or having their roles changed may experience uncertainty and anxiety as a result of this.
Takeovers, on the other hand, can open up new opportunities for employees. They may, for example, have access to new training and development programs, expanded career paths, and improved benefits. A takeover can also result in a change in management, which can result in new ideas and strategies that benefit the company and its employees.
A takeover can have a significant impact on a company’s operations. The acquiring company may choose to restructure the target company, resulting in changes to product lines, manufacturing processes, and distribution networks. Customers and suppliers may experience short-term disruptions and uncertainty as a result of this.
When a takeover occurs, companies must have a clear communication plan in place to ensure that employees and stakeholders are kept informed and feel supported throughout the transition.
Strategies for surviving a takeover as an employee
If you work for a company that is being acquired, you may be concerned about the future. There are, however, strategies you can employ to improve your chances of surviving a takeover and thriving in the new organization.
To begin, it is critical to stay informed and up to date on the latest developments in the takeover process. This can help you anticipate and prepare for changes. Keep an eye on the news, attend any management meetings or briefings, and stay in touch with your coworkers.
Second, concentrate on proving your worth to the new organization. Highlight your skills, experience, and accomplishments to demonstrate that you are a valuable asset to the company. Be willing to adapt to changes in the company’s operations and to learn new skills and take on new responsibilities.
Third, build relationships with new colleagues in the acquiring company by networking with colleagues. This can assist you in developing a support network and learning about the company’s culture and processes.
Lastly, take care of yourself during the transition. A takeover can be a stressful time, so it’s important to practice self-care and seek support if needed. Talk to your manager, a mentor, or a counsellor if you’re feeling overwhelmed or uncertain about the future.
Understanding the meaning and implications of takeovers
Takeovers are common in business and can have serious consequences for companies, employees, and stakeholders. It is critical to understand the various types of takeovers, how they affect the companies involved, and how employees can prepare for and navigate a takeover.
Whether a hostile or friendly takeover occurs, it is critical to have a clear communication plan in place to ensure that employees and stakeholders are kept informed and supported throughout the process. Companies must also consider the impact of a takeover on their workforce and take steps to mitigate any negative consequences.
In Nigeria, takeovers can only be done to publicly quoted companies, hence, a takeover bid cannot be done to a private limited liability company under Nigerian law.
Takeovers vs Acquisitions: the difference
Takeovers and acquisitions are very similar. It is a common practice for fewer business-savvy persons to interchange one for the other. Nonetheless, they are distinct, an acquisition occurs when a party acquires another business through a private transaction which involves little or no regulators. The acquisition is simply an outright sale of a company’s stocks to the investor by the company. Most private limited liability companies and public unquoted companies prefer acquisitions because of the leverage the company holds in the transaction. The acquisition offers the company a much deeper understanding of the personality of the acquirer.
The takeover on the other hand involves a party acquiring a company through the stock market; here the acquirer simply looks at the terms through the prospectus and makes an offer to the company’s management. The acquirer can also deploy varying hostile takeover techniques to buy off the stocks of the company without the knowledge of the company’s shareholders.
To summarize, takeovers are a common occurrence in business, and they can have significant ramifications for the companies involved as well as the market as a whole. Takeovers, whether hostile or friendly, can result in changes in company ownership, management, and structure.
To make informed decisions as an investor or business owner, it is critical to understand the meaning and implications of takeovers. Takeovers, with the proper knowledge and understanding, can be a strategic move that benefits both parties involved.
Frequently Asked Questions?
A friendly takeover is a merger or acquisition where the target company’s management agrees to the deal and works with the acquiring company to ensure a smooth transition. In contrast, a hostile takeover is when the acquiring company makes a bid for the target company without the support of its management and may use aggressive tactics to gain control.
Employees can prepare for a takeover by staying informed about the latest developments in the process, focusing on demonstrating their value to the new organization, building relationships with colleagues in the acquiring company, and taking care of themselves during the transition. It’s also important for companies to have a clear communication plan in place to ensure that employees are informed and supported throughout the process.