In the world of mergers and acquisitions, the acquisition of control is a highly sensitive and complex process, especially when the target company is not yet prepared for anti-takeover. How to ensure that the company can smoothly grasp the control is particularly critical. To this end, companies must formulate a thorough strategy and take appropriate countermeasures to ensure the smooth progress of the M&A transaction.
As a leading M&A consulting firm in the industry, Goheal has accumulated valuable practical knowledge with its many years of M&A experience to help investors and companies to steadily acquire control. This article will detail how companies should ensure the successful implementation of the acquisition plan through five key steps when facing potential anti-takeovers.
Understand the main strategies of anti-takeover
Anti-takeover refers to a series of strategies adopted by the target company to prevent the acquirer from gaining control when facing a hostile takeover. Common anti-takeover strategies include poison pill plans, white knight acquisitions, asset splits, etc. These measures are designed to increase the acquisition cost of the acquirer or directly prevent the acquirer from acquiring. In order to effectively deal with these countermeasures, the acquirer needs to prepare in advance to ensure that it has a dominant position in the entire M&A process.
For example, the oversubscription case of Saudi developer Umm Al Qura's IPO shows that in some cases, the enthusiasm of the capital market can be an important tool for control acquisition. The Saudi developer's IPO received $126 billion in subscriptions and planned to raise $523 million, which shows the importance of market confidence. In M&A transactions, companies should have corresponding market sensitivity and adjust their strategies at any time to cope with possible market changes.
Step 1: Clarify acquisition targets and formulate M&A strategies
Before any acquisition action, companies must clarify the acquisition targets and their strategic significance. M&A is not just to occupy more assets, but to achieve strategic goals, such as market expansion, technology acquisition, resource integration, etc. Therefore, formulating clear M&A goals and strategies is the key to ensuring the success of the acquisition.
For example, Life360 acquired Fantix's subsidiary to enhance its AI advertising capabilities. This acquisition case reflects the company's strategic layout in technology integration. When helping companies plan M&A strategies, Goheal usually helps acquirers select target companies that can provide the greatest synergy through in-depth market analysis and research on competitors.
Step 2: Evaluate the target company's defensive capabilities
When conducting a hostile takeover, the acquirer must evaluate the anti-takeover measures taken by the target company and its defensive capabilities. This includes analyzing whether the target company has deployed a poison pill plan, whether there is a shareholder rights plan, and whether there are other possible anti-takeover measures.
Once it is assessed that the target company has taken these defensive measures, the acquirer should prepare a response plan in advance to ensure that these lines of defense can be broken. The M&A consulting services provided by Goheal to clients often include a detailed analysis of the target company's defensive strategy to help clients tailor solutions.
Step 3: Optimize the acquisition funding structure and financing channels
When facing a hostile takeover, the acquirer needs to ensure that it has sufficient funds to support the acquisition. Funding is not only related to the smooth progress of the acquisition, but also directly affects the bargaining chips that the company can provide during the acquisition process.
Goheal usually helps clients design a suitable funding structure to ensure sufficient funds and increase the flexibility of the acquisition. For example, the case of Revolut considering selling shares at a valuation of US$60 billion shows that strengthening the financial strength of a company through public financing is an effective means to face hostile takeovers. The acquirer can increase the acquisition fund pool through different financing methods, such as debt financing, equity financing, etc., to ensure that the acquisition costs can be paid and occupy a dominant position in the market.
Step 4: Conduct effective shareholder communication and gain support
In a hostile takeover, shareholder support is one of the key factors that determine whether the acquisition can be successful. The acquirer needs to communicate with the target company's major shareholders and key shareholders at the beginning of the acquisition to gain their support to ensure the smooth progress of the acquisition process.
This communication is not only to gain shareholder support, but also to dispel shareholders' doubts about the consequences of the acquisition through information disclosure. Goheal has rich experience in helping companies build good relationships with shareholders during the acquisition process and ensure that shareholders remain actively supportive throughout the process through effective communication channels.
Step 5: Prepare for possible legal challenges
Hostile takeovers often trigger legal challenges from the target company, especially when it comes to issues such as shareholder rights and antitrust review. The acquirer must be prepared for legal compliance in advance. Companies should foresee possible legal resistance and develop response plans.
For example, PLDT plans to acquire KKR's shares in Maya's fintech subsidiary to further control the Philippine fintech business. If antitrust or other regulatory issues are encountered, the acquirer needs to quickly coordinate the legal team to eliminate potential legal risks through compliance review and legal means.
Conclusion: Are you ready?
In the face of hostile takeovers, how can companies ensure that they gain advantages in the complex capital market? Through the five steps provided by Goheal - clarifying M&A targets, evaluating defense capabilities, optimizing capital structure, seeking shareholder support, and preparing for legal challenges, companies can effectively respond to the threat of anti-takeovers and ensure the smooth completion of control acquisitions.
With the changes in the global capital market, more and more companies are beginning to realize the importance of control acquisitions. What factors do you think companies need to pay most attention to when acquiring control in the current economic situation? Welcome to share your views in the comment area and discuss with us how to maximize capital in mergers and acquisitions!
[About Goheal] American Goheal M&A Group is a leading investment holding company focusing on global M&A holdings. It has been deeply involved in the three core business areas of listed company control acquisitions, listed company M&A reorganizations and listed company capital operations. With its deep professional strength and rich experience, it provides companies with full life cycle services from M&A to reorganization to capital operations, aiming to maximize corporate value and long-term benefit growth.
