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What if I say no to a hostile acquisition?

On Behalf of | Jun 23, 2016 | Mergers & Acquisitions

Submitting to a hostile acquisition can be tempting due to high offers and lagging profits. However, some business owners in New York may be reluctant to agree to such acquisitions due to the ultimate loss of control over an enterprise. If you are facing a similar decision, you may be curious as to the consequences of denying or defending against a hostile takeover bid.

The New York Times offers some insight into companies that have fought off hostile bids in an attempt to provide shareholders with greater profits. A report shows that in many cases those companies that were successful in denying bids ultimately did not deliver on their promise to increase investor returns. This has much to do with the products a company offers and how much of a particular market your company lays claim to. Accordingly, companies that offer products or services that can’t easily be provided by competitors have the best chance of turning down a bid victoriously.

This was the case for a genetic technology company, which turned down an offer in the billions and ultimately went on to oversell their competition by 247 percent. Their success was attributed to the company’s unique product line, as well as the fact that it was deemed to be undervalued by the company attempting to make the acquisition.

However, you should be aware that this level of success is not the standard. Of the other companies surveyed, it’s projected that the majority should have taken the initial offers to sell. The creation of new revenue over time can be difficult, especially when management is struggling in the first place. 


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