Significance of Advisory Services in Merger and Acquisition

A takeover is often a process wherein an acquirer takes over power over the prospective company. The acquirer may accomplish that without or with the consent from the shareholders. Here are some of their defenses found in the U.S, Europe and India

Pac-man Defence

This tactic is commonly accustomed to prevent a hostile takeover. Here the objective company counters the takeover bid if you attempt to obtain the bidder’s company by making a counter offer to get the process of the acquiring company. This diverts the eye in 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 for the exact purpose of assuming treating the business.

Nancy Reagan Defence

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

Bank Mail

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

The acquiring firm may also try to keep others out from the fray. As an example, Company A planning to buy Company B may seek a guarantee from the bank it will either loan provider A’s bid or no bid in any way. Such a strategy doubles to close others from your takeover fray.

Crown Jewel Defence

Crown jewel represents the most valuable unit or department of your company. These products are categorized as crown jewels based on their profitability, worth of assets owned, and future growth prospects. Since these are the most effective areas of the company, they are often used as a takeover defense. Here the corporation creates anti-takeover clauses whereby it provides the to certainly put up for sale the crown jewels in the eventuality of a hostile takeover.


Sandbag occurs the mark firm will defer the takeover or even the acquisition with the hope that another firm, with better offers, may takeover instead. Put simply, it is the process where the target firm “kills time” while looking forward to an even more eligible firm to initiate the takeover.

It is an anti-takeover strategy whereby the target firm issues a charter preventing individuals with more 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. If your acquirer enters this trap, it is tough to exit as the acquirer can neither acquire controlling stake in the business in 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 employed 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.
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06.10.2017 17:40:12

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