Takeover indicates either processes involving the legal, organizational and economic merger of the organizations or enterprises, or the actual outcome of these processes. Takeover has always several levels in which they must take place - particularly the financial, property, legal, organizational, procedural or cultural. Takeover enterprise is integrated into the acquiring company (acquirer) and after acquisition processes there is a single entity.
The takeover can be either friendly or hostile:
- Friendly takeover is one in which there is an absolute consensus of both parties
- Hostile takeover is one in which the agreement of the owners (e.g. shareholders) but the management of the company taken over doesn’t agree with it.
The subject of the acquisition may not be only the entire enterprise, but also the different parts of the organization or its assets. Thus there are different levels of takeover:
- The whole company takeover (merger or acquisition)
- Assets takeover - purchase of assets such as buildings, equipment and other property of the company
- Capital takeover - buy majority shares of the company and its inclusion in their own holding company
Use of the takeover in practice: Takeover may be one of the methods to business growth. Unlike organic growth it allows a much faster growth and expansion of the enterprise. By its nature, however, takeover has a lot of hidden risks, especially the cultural-organizational aspect, which may be the reason of unsuccessful acquisition - merger of two companies with different cultures and organizational practices. Takeover is primarily used by large multinational corporations and, thus rapidly gaining new markets, acquire new technologies, patents, optimize their tax burden or allocate free capital.
Related terms and methods:
- Due Diligence
- Holding Company (Parent Company)
- Joint Venture
- Mergers & Acquisitions
Related management fields: