Taking over a company is something that involves a lot. We tell you the basics. What exactly is an acquisition? What types of mergers and acquisitions are there? And why should you do a business takeover or have it done?
Meaning takeover company
A business takeover is when one company buys another company. This is usually done by purchasing the majority of the shares.
Another word for takeover is acquisition, and the English term for takeover is (also) acquisition. If you want to sell your business, a business takeover is often part of your exit strategy.
Types of acquisitions
There are different types of mergers and acquisitions: the friendly takeover, hostile takeover and merger. Mergers and acquisitions are in English Mergers and Acquisitions (M&As) named.
We call a business takeover friendly if both parties agree to the takeover. The Board of Directors of the organization to be acquired has then approved the acquisition. The two companies then work together towards a good acquisition.
A takeover is hostile if a company does not want to be taken over. If the other party then acquires more than 50% of the shares, it still owns it. Even if the 'target company' doesn't really want that.
For example, a hostile takeover can occur if the other party buys out shareholders of the "target company" without the approval of the board of the company being acquired.
In a merger, two companies continue together as one. These companies are often equivalent. Usually companies opt for a merger because they realize that they are stronger together. Often a merger is also given a new name, instead of the name of one of the two companies. In effect, it becomes a new company.
Tip: these are the differences between a management buyout and a management buy-in.
Important: due diligence investigation
When taking over a company, the purchasing party wants to know where it stands. That is why due diligence is an important part of acquisitions. In Dutch we call this due diligence, and that actually says exactly what it is.
The buying party dives into the books of the party they want to buy. For example, they conduct extensive research into, among other things, the legal and financial situation. Due-diligence research on acquisition is done so that the buyer is not faced with surprises after the acquisition. Usually a due diligence investigation is also included in the Letter of Intent.
Why a business takeover?
There are many reasons for wanting a business takeover. For example if you want to go international, or if you want to grow as a company. A business takeover is also a way to reduce competition. If you buy up the competition, you won't be bothered by it anymore.
When you want to leave your company yourself, you want someone else to take over. A company takeover or merger is a logical choice. This could be, for example, if you startup raised and want to take the next step.
Do you want to sell your company? View our infographic with 16 Factors That Affect Your Business Value.
In many cases, when you exit, you want another company to take over your company. Your own company is worth a lot to you, so make sure you are well prepared for your soul and salvation to be taken over by someone else.