Companies can succeed for decades flying under the radar. But the more successful the venture is, the far likelier it is for companies to attract the big guns in corporate mergers and acquisitions.
One way to force a company into a takeover or merger is through the use of an unsolicited acquisition strategy known as a corporate bear hug.
What it is and offers
Bear hugs are designed to appeal to shareholders and force publicly traded corporations to enter into what are often hostile negotiations with potential acquirers.
By dealing directly with the board, the acquiring company forces these companies to either accept the corporate takeover or to have a seat at the negotiation table. The fear of the companies being acquired is typically justified, as these takeovers usually involve management turnovers.
Bear hugs and corporate rebrands
A corporate bear hug can change companies’ brand trajectory overnight. One company could publicly offer to buy another at a marked premium, persuading shareholders while challenging the target company’s board at the same time. This tactic aims to benefit shareholders with a high offer and pressures the board to negotiate, risking management changes and drawing intense scrutiny on the company’s performance and valuation.
How to handle a bear hug
Those that manage to navigate the shoals of a hostile takeover typically do best when they remain a dedicated steward of company resources during all phases of a bear hug. Doing that requires transparency and diligence to best represent the company, its board of directors and shareholders.