Takeover


takeover

If you need consultation and other statutory services related to takeover, then you can rely on Chartered Finance Management Limited (CFML), a Mumbai based financial advisory services firm.

A takeover is the process of one company acquiring another. The acquiring company does so with the aim to get the control of the management of the targeted company. Takeover is done by way of acquiring majority stake in the company to be acquired. In most cases the acquiring company is financially sound and the acquired company has hit a major financial roadblock or it has been undergoing financial instability for quite some time or else times is a synergy in the business operations. We see takeovers happening quite often in corporate world. Sometimes, it is the best solution to pull a company out of financial turmoil and protect the interest of all stakeholders.

There could be multiple reasons behind this financial crunch. The acquired company is finding it difficult to retain its market share due to strong competition. A major technological shift has happened and the company has been unable to adapt itself, thereby making its product or services redundant in the changed market expectation. Due to finance problem the company could be facing issues in maintaining supply chain management or strong network of channel partners. The company could be facing problems on the employee retention front, competitors may be poaching its employees thereby leading to a rapid talent exodus. There may be differences within the management team and this is leading to a lot of disharmony and bad reputation amongst the stakeholders. A sudden change in government policies or market situation could make it difficult for the company to operate.

Sometimes the process of takeover is peaceful and sometimes it is hostile, where the acquiring company attempts to forcefully take charge of the other company. In the latter case, the events leading to the takeover and the post-acquisition phase could be very dramatic and tense. There could be sudden or phased exit of the top management and the employees of the acquired companies. Whatever may be the case, takeovers are sometimes a necessary evil in order to achieve a larger good.

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